Source:  Tom Johnston, MEATINGPLACE.COM, 8/9/10

Tyson Foods Inc. said today its net profit in its fiscal third quarter rose 89 percent, thanks to higher beef and pork prices. The company also credited continued improvement in its chicken business, but anxiety remains over its plans to increase production in that segment.

For the quarter ended July 3, Tyson posted net income of $242 million dollars, or 65 cents per diluted share, compared with $130 million, or 35 cents per share, in the same period a year ago. Sales rose to $7.4 billion in the quarter from $6.6 billion in the year-ago period.

Analysts expected earnings of 58 cents per share on revenue of $7.28 billion, according to a poll by Thomson Reuters.

Driving the success were big jumps in average prices in beef and pork of 19.5 percent and 31.6 percent, respectively. Meanwhile, prepared foods prices were up 10.3 percent. Chicken prices were down 3.2 percent.

Production plans
Analysts on today’s earnings call with Tyson executives, however, harped on the company’s plans to boost chicken production in fiscal year 2011, and the company’s stock performance appeared to reflect concerns about potential price dilution. Shares of Tyson were down 4.55 percent in mid-day trading on the New York Stock Exchange.

Tyson officials assured that demand will be there to match increased supply and support chicken prices, especially in light of reductions of domestic supplies of beef and pork as well as continued strength in export demand.

“We have a pretty optimistic view about demand for [increased] production,” Tyson President and CEO Donnie Smith said on the call. “We will maintain our rigor going into [first quarter of fiscal 2011] and out of [first quarter of fiscal 2011] with the right amount of inventory.”

Resumption of trade with Russia, which has accounted for 5 percent of total U.S. poultry production in recent years, would help the overall situation. For Tyson, exports to Russia represented 10 percent of its $1.6 billion in international chicken sales in fiscal 2009.

Other question marks include grain costs, which Tyson expects to rise in fiscal 2011.

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