November 11, 2008

Tyson Foods Inc. reported a 50-percent increase in fiscal fourth-quarter net income as strength in the company's beef and pork segments more than offset losses from the poultry business.

For the quarter ended Sept. 27, the world's largest meat processor posted net income of US$48 million, or 13 cents a share, up from US$32 million, or 9 cents, a year earlier. The latest results included a 1-cent profit from discontinued operations and a 2-cent restructuring charge.

Revenue rose 9.5 percent to US$7.2 billion.

Analysts polled by Thomson Reuters expected earnings of 18 cents on revenue of US$6.98 billion.

Gross margin rose to 5 percent from 4.7 percent.

In the companies' two biggest markets, beef sales increased 4.6 percent to US$3.1 billion despite a 7.5 percent volume decline, while chicken sales rose 12 percent to US$2.38 billion on higher volumes prices. Pork and prepared food revenue climbed 21 percent and 9.1 percent, respectively.

But the chicken segment swung to a quarterly loss on increased grain costs. The beef division's profits surged to US$159 million from US$5 million, a year ago on increased prices and a US$77 million net gain from a live cattle futures contract. The pork segment's profit more than doubled amid record margins.

"Producing the three major proteins has proven to be a strategic advantage," said Chief Executive Richard L. Bond. "The strong performance by our beef and pork segments supported the chicken segment as it struggled throughout the year due to low prices and high input costs."

A glut in the market and the consumer trend of trading down to dark meat or pork has made raising chicken prices difficult, despite higher costs. The company plans to raise US$705 million to weigh possible acquisitions as it faces fierce international competition, notably from Brazilian producers. In fiscal 2008 and late fiscal 2009, the company acquired three poultry operations in Brazil.

Tyson shares rose 5.1 percent to US$7.84 in pre-market trading.