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Tyson Foods Profit Rises On Higher Beef, Chicken Prices

Meat products maker Tyson Foods, Inc. (TSN: Quote) reported Monday a rise in second-quarter profit, as higher beef and chicken prices more than offset the impact of lower sales volumes. Earnings per share topped analysts' estimates, while the top line missed their view.

Looking ahead, the company expects overall domestic protein (chicken, beef, pork and turkey) production to decrease in fiscal 2012.

"Because exports are likely to remain strong, we forecast total domestic availability of protein to be down 2-3% compared to fiscal 2011, which should continue to support improved pricing," it noted.

During the second quarter, chicken sales volumes declined 1.6 percent, while average sales price rose 8 percent from last year. Beef sales volumes were down 10.7 percent, but average sales price grew 13.2 percent. In pork segment, sales volumes and average sales price declined 0.1 percent and 0.8 percent, respectively.

Donnie Smith, president and chief executive officer of the company said, "The Chicken, Pork and Prepared Foods segments all were in or above their normalized operating margin ranges, while Beef essentially broke even despite extremely challenging market conditions."

In the second quarter, net income attributable to the company increased to $166 million or $0.44 per share from $159 million or $0.42 per share reported last year. On average, 15 analysts polled by Thomson Reuters expected earnings of $0.39 per share. Analysts' estimates typically exclude one-time items.

The Springdale, Arkansas-based Fortune 500 company's sales grew 3.4 percent to $8.27 billion from $8 billion in the year-ago quarter, but missed analysts' estimate of $8.49 billion due to lower production.

Domestic production pounds were lower in the quarter as the company balanced its supply with forecasted customer demand.

Looking ahead, Smith said the company has the potential to earn $2 per share in fiscal 2012 if it executed as planned. Sixteen analysts expect earnings of $1.98 per share.

Tyson Foods anticipates fiscal 2012 sales to be about $34 billion, mostly resulting from price increases related to decreases in domestic availability of protein and rising raw material costs. Fifteen analysts project sales of $34.43 billion for the fiscal ending September 2012.

TSN closed Friday's regular trading at $18.04 on the NYSE. In the pre-market activity, the shares are up 2.27 percent.

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by RTT Staff Writer

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