Tyson Foods warned that tough times for meat groups were not
over yet, despite the biggest US-based protein producer reporting a near-doubling
in quarterly profits, which sent its shares soaring 10%.
Donnie Smith, the Tyson chief executive, said that its 2013
fiscal year, which began last month, was "likely to be equally, if not more
difficult" than the previous year, in which the meat and livestock industry was
tested by rising grain prices – and difficulty passing on these increases in
full to consumers.
The group was likely to see profitability at its beef and chicken
operations fall short of typical levels although, although "strong" US exports
would allow the pork division to report margins at least in line with the
"The drought conditions will the summer of 2012 reduced
grain supplies which will result in higher input costs," Tyson said.
'Rising above the noise'
However, the group forecast that it would raise revenues to "approximately"
$35bn for the year to next October, suggesting that it is well on target to
meet market expectations for sales of $34.9bn.
Indeed, Mr Smith said that Tyson was, after years of
investment and fine tuning in its sales prices, "rising above the noise of
commodity markets to produce solid more consistent results".
"It has taken us several years and a lot of work to get to
this point, and although there is much more to be done, I believe we have
reached a new level of sustainable performance."
In the three months to October 1, the last quarter of its
2011-12 fiscal year, the group reported earnings of $185m, up from $97m a year
At an underlying $0.55 per share, the earnings also beat
Wall Street forecasts for a $0.44-a-share result.
The improvement reflected in the main a return to the black in
the group's poultry division, which was boosted by the restructuring undertaken
industry-wide last year to cut production and regain pricing power over chicken.
Tyson said that its poultry slaughter, by weight, fell by 4%
Quarterly profits in the, smaller, prepared foods division
soared 39% to $39m, also helping balance out the 40% slump to $68m in pork
division, which was squeezed by a drop in pork prices resulting from a rise in
slaughter rates forced by higher grain costs.
In beef, quarterly operating profits were flat, with high
prices balancing out a hit from lower sales volumes and higher costs of buying
'Didn't make excuses'
While, for the full 2011-12, earnings fell 22% to $583m, Mr
Smith termed the result "our best effort to date" given the market headwinds.
"Our team members didn't make excuses – they made a
difference, and they made money," he said.
Tyson shares closed 10.9% higher at $18.72 in New York.