Source:  Tom Johnston, MEATINGPLACE.COM, 3/26/10

Coming off a record-profit quarter in its long-struggling chicken segment, Tyson Foods will continue to take a disciplined approach to production, the company' s vice president and treasurer, Ted Jones, told investors Thursday at the Barclays Capital 2010 High Yield Bond and Syndicated Loan Conference in Phoenix.

A return to profitability in the chicken industry has some investors worried that companies will ramp up production and thereby throw off the balance of supply and demand, a problem that helped put many of them in dire straits during the deepest stages of the recession.

Jones noted that pullet production was up 2 percent year-on-year in February, prompting an investor to ask whether discipline in production would continue.

"We feel that is a very manageable level, especially when you combine that with the reduction in supply for all the other proteins," Jones responded.

USDA's latest cold storage report showed total red meat and total poultry supplies in freezers as of Feb. 28 were each down 13 percent from the same period last year.

Tyson's operating income in chicken was $78 million, or 3.2 percent of sales, in the first quarter of fiscal 2010, compared with a loss of $286 million, or -12.8 percent of sales, in same period last year, when feed and fuel costs took a heavy toll.

The company has said its chicken business will return to normalized operating margins of between 5 percent and 7 percent sometime in fiscal 2010. The number was -1.6 percent in fiscal 2009 and -1.3 percent in 2008.

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