DOW JONES NEWSWIRES
Tyson Foods Inc.'s (TSN) fiscal third-quarter earnings surged,
topping analysts' expectations, amid rising chicken prices and
volumes as well as falling grain costs and inventories.
Chief Executive Leland Tollett said all of the company's
segments were profitable in the quarter, but warned soft demand
will likely to make the current quarter more challenging. Still,
"I'm feeling much better about our position than I would be if we
were sitting on a lot of inventory," Tollett said.
The meatpacker has posted losses in the two prior quarters as
demand plunged, partly because of recession-hit restaurants' woes.
Internal tension at Tyson about how to navigate the meat-industry
slump led to changes at the helm, with Tollett taking back the
chief executive's job on an interim basis in January.
Tyson cut production late last year, planning to tweak its
product mix, while predicting a fiscal second-half profit. The
company in recent months planned to reduce its hog herd by 30% and
sell five of its swine operations amid weak demand.
When Tyson reported first-quarter results in May, the company
said its chicken segment returned to profit and that grain-hedging
efforts that backfired when commodity prices slumped were "mostly
behind us."
For the quarter ended June 27, the meatpacker reported a profit
of $134 million, or 35 cents a share, up from $9 million, or 3
cents, a year earlier. Revenue decreased 2.7% to $6.66 billion as
volume rose 3.1%.
Analysts polled by Thomson Reuters most recently were looking
for earnings of 22 cents on revenue of $6.68 billion.
Gross margin rose to 7.1% from 3.8% amid the sales gains and
eased commodity pressures.
Chicken sales volume rose 5% as average prices climbed 2%. The
segment saw earnings rise 5.9%, in contrast with the losses in
recent quarters. Beef sales volume, Tyson's largest segment, rose
2.6%, though average prices were down 11%. Still earnings were up
2.4%.
Shares closed at $11.43 on Friday and didn't trade premarket.
The stock has lost nearly a quarter of its value in the past year,
though it has more than doubled from a two-decade low in
November.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
tess.stynes@dowjones.com