Shares in Tyson Foods hit a 10-month high in early deals after the meat giant raised its earnings guidance thanks to stronger-than-forecast results in beef, in a statement which also revealed 450 job losses.
The US-based group raised to $5.20-5.30 per share, from $4.95-5.05 per share, its forecast for underlying earnings in its 2017 fiscal year, which ends on Saturday.
The upgrade took the guidance above the $5.07-per-share result that Wall Street has pencilled in.
For its 2018 fiscal year, Tyson Foods forecast earnings of $5.70-5.85 per share, well above the $5.36 per share expected by analysts.
Tyson Foods shares soared 7.8% to $70.55 in early deals in New York, a price which, the highest since November last year.
Tyson Foods attributed its earnings upgrade to "much-better-than-expected earnings in the beef segment", a market in which meat packers' margins have been supported by fillips from both firm meat prices, supported by strong demand, and relatively weak fed cattle values.
Spot October live cattle futures closed on Thursday at 108.975 cents per pound in Chicago, within 5 cents of 2017 lows set earlier this month, with prices weighed by expectations of strong supplies of fattened animals from feedlots.
Meanwhile, according to Steiner Consulting the US "beef export pace remains quite strong, with August beef shipments up sharply from the previous year, 15-20%, and on track to increase some 8-10% in September".
Beef packers' margins stood at $132.75 per head on Wednesday, up from $98.40 per head a year before, according to HedgersEdge.
Tyson Foods also unveiled plans to cut 450 jobs "across several areas and job levels" in a drive to realise cost savings from June's AdvancePierre Foods acquisition.
Tyson Foods forecasts achieving cost savings from the deal of $200m in its next financial year, $400m in 2019 and $600m in 2020.
The group forecast its fourth-quarter results would report one-off charges of $140m-150m relating to the restructuring.
By Mike Verdin