Tyson Foods profit beats view, shares up

By @ibtimes on

U.S. meat producer Tyson Foods Inc reported a lower quarterly profit due to higher feed costs for its chickens, while strong pork exports helped results beat estimates.

Tyson shares were up 2 percent in early trading, while the broader market was down 2.2 percent.

The company, which produces beef, pork and chicken, now predicts its chicken unit, the nation's largest, will lose money in the current quarter.

Springdale, Arkansas-based Tyson has been unable to raise meat prices fast enough to offset higher costs due to large supplies of chickens in the markets.

The price of corn fed to the chickens its raises more than doubled this year. And the price of cattle and hogs that it buys for its beef and pork plants are at record highs.

I think it is an early warning sign the economy was not as strong as people thought it was, Paul Aho, economist with Poultry Perspective, said of the weak meat sales.

Tyson's chicken unit, like its competitors, also has been hurt by weak chicken sales. Producers have been cutting production, but Tyson said that should not affect supplies until late in the current quarter.

The pork segment's returns were above the new normalized range, the company said. We expect pork exports to remain strong in fiscal 2012.

Operating income dropped in all three meat segments. The largest decline came from the chicken unit, which fell 85 percent.

The weak U.S. economy and high unemployment was largely responsible for the sluggish meat sales, Chief Executive Donnie Smith said during a conference call with Wall Street analysts.

Because of these factors, we expect our chicken segment will likely experience a loss for the fourth quarter of fiscal 2011, the company said.

Previously, the company has predicted chicken would be profitable in every quarter this fiscal year.

The largest U.S. meat processor earned $196 million, or 51 cents per share, for the third quarter ended on July 2, compared with $248 million, or 65 cents a share, a year earlier.

Excluding an unusual reduction in income tax expense, the results were 46 cents per share. Wall Street, on average, forecast 40 cents, according to Thomson Reuters I/B/E/S.

Revenue rose to $8.25 billion from $7.44 billion.

Tyson shares were up 2 percent to $16.65 at the New York Stock Exchange.

(Additional reporting by Phil Wahba; Editing by Lisa Von Ahn and Derek Caney)

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