Higher chicken, beef sales boost Tyson's results

Reuters

Nov 18 (Reuters) - Tyson Foods Inc reported a 28percent jump in quarterly profit on Monday, helped by higherchicken sales and a rebound in its beef business, and said itexpected to benefit from lower grain costs this fiscal year.

Executives said Tyson's chicken business in China, which washurt by the recent bird flu outbreak there, would be a majorsource of margin improvement and that it would turn profitableby the end of the current fiscal year in September 2014.

Shares of the largest U.S. meat processor rose 1.4 percentto $29.17 in afternoon trading and are up more than 70 percentfrom a year ago.

Tyson forecast a roughly 1 percent rise in U.S. productionof chicken, beef, pork and turkey for fiscal 2014 as increasedgrain supplies reduce the cost of raising animals.

The Springdale, Arkansas-based company also said ChiefOperating Officer Jim Lochner, known in Tyson circles as the"guru," would retire at the end of fiscal 2014.

U.S. meat producers are coming off a tough year when higherfeed costs crimped margins. That pushed up meat prices,prompting many grocery shoppers and restaurant operators toswitch to lower-priced chicken products from other meats.

Tyson said it expected fiscal 2014 sales of about $36billion. Analysts on average had forecast $35.67 billion,according to Thomson Reuters I/B/E/S.

JPMorgan analyst Ken Goldman said he expected Tyson's U.S.chicken production to increase at a slightly faster rate thanthe company's forecast for a 3 to 4 percent rise.

Tyson said it expected industry hog supplies to increase 1to 2 percent in fiscal 2014.

Executives said the outbreak of a swine virus deadly to babypigs had begun to affect the market and industry veterinarianshave estimated that supplies could be down 1 percent this year.Reduced supplies could push up wholesale pricing, they said,adding that they do not expect shortages at Tyson plants.

Jimmy Dean sausage maker Hillshire Brands Co saidearly this month that the outbreak of porcine epidemic diarrheavirus, or PEDv, was hurting its bottom line.

Analysts said higher beef and pork prices should keepboosting demand for chicken. Tyson's chicken sales rose 2.4percent to $3.16 billion in the fourth quarter ended Sept. 28,accounting for about 36 percent of total sales.

Beef sales rose about 4 percent to $3.75 billion,contributing about 42 percent of the company's total.

"We were encouraged by the impressive results in beefsegment amidst weak industry results," KeyBanc Capital analystAkshay Jagdale said in a note.

Pork sales fell 5.6 percent to $1.40 billion.

Tyson's total sales rose 7 percent to $8.89 billion, in linewith analysts' estimates.

Net income from continuing operations rose to $259 million,or 70 cents per share, from $203 million, or 57 cents per share,a year earlier.

Analysts on average had expected earnings of 69 cents pershare.

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