Source:  Rita Jane Gabbett, MEATINGPLACE.COM, 9/25/09

Stephens Inc. analyst Farha Aslam has raised her 2009 earnings forecasts for Tyson Foods based on an optimistic view of profitability in its beef, pork and prepared foods businesses.

Aslam put fiscal 2009 earnings at 24 cents per share, up from 16 cents per share earlier. For fiscal 2010, she boosted her forecast by a penny to 95 cents per share, expecting strong improvement in chicken profitability driven by lower grain costs.

Beef

Aslam raised her forecast for Tyson's beef operating margins in its fiscal fourth quarter to 2.6 percent from 1.6 percent earlier and compared to 5.4 percent a year ago. While beef sales volume and pricing are down on reduced foodservice demand, she cited good discipline by beef packers in reducing production in line with demand.

Pork

Similarly, Aslam now expects Tyson to realize fourth quarter pork margins of 4.5 percent, up from 3.6 percent earlier and compared to 7.5 percent last year. Pork prices have rallied over the past month while hog prices have remained depressed, which is positive for Tyson because it buys hogs and sells pork.

Poultry

Aslam now expects fourth quarter poultry sales to decline by 4 percent to 5 percent from a year ago instead of declining by 6 percent to 7 percent, largely because higher bird weights are expected to drive higher sales volume.

She also noted that despite rhetoric about China pulling back on poultry purchases to punish the United States for trade action on tires, "China over the past few weeks has been business as usual."

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