UPDATE 4-Higher chicken, beef sales boost Tyson's results
Nov 18 (Reuters) - Tyson Foods Inc reported a 28 percent jump in quarterly profit on Monday, helped by higher chicken sales and a rebound in its beef business, and said it expected to benefit from lower grain costs this fiscal year.
Executives said Tyson's chicken business in China, which was hurt by the recent bird flu outbreak there, would be a major source of margin improvement and that it would turn profitable by the end of the current fiscal year in September 2014.
Shares of the largest U.S. meat processor rose 1.4 percent to $29.17 in afternoon trading and are up more than 70 percent from a year ago.
Tyson forecast a roughly 1 percent rise in U.S. production of chicken, beef, pork and turkey for fiscal 2014 as increased grain supplies reduce the cost of raising animals.
The Springdale, Arkansas-based company also said Chief Operating Officer Jim Lochner, known in Tyson circles as the "guru," would retire at the end of fiscal 2014.
U.S. meat producers are coming off a tough year when higher feed costs crimped margins. That pushed up meat prices, prompting many grocery shoppers and restaurant operators to switch to lower-priced chicken products from other meats.
Tyson said it expected fiscal 2014 sales of about $36 billion. Analysts on average had forecast $35.67 billion, according to Thomson Reuters I/B/E/S.
JPMorgan analyst Ken Goldman said he expected Tyson's U.S. chicken production to increase at a slightly faster rate than the company's forecast for a 3 to 4 percent rise.
Tyson said it expected industry hog supplies to increase 1 to 2 percent in fiscal 2014.
Executives said the outbreak of a swine virus deadly to baby pigs had begun to affect the market and industry veterinarians have estimated that supplies could be down 1 percent this year. Reduced supplies could push up wholesale pricing, they said, adding that they do not expect shortages at Tyson plants.
Jimmy Dean sausage maker Hillshire Brands Co said early this month that the outbreak of porcine epidemic diarrhea virus, or PEDv, was hurting its bottom line.
Analysts said higher beef and pork prices should keep boosting demand for chicken. Tyson's chicken sales rose 2.4 percent to $3.16 billion in the fourth quarter ended Sept. 28, accounting for about 36 percent of total sales.
Beef sales rose about 4 percent to $3.75 billion, contributing about 42 percent of the company's total.
"We were encouraged by the impressive results in beef segment amidst weak industry results," KeyBanc Capital analyst Akshay Jagdale said in a note.
Pork sales fell 5.6 percent to $1.40 billion.
Tyson's total sales rose 7 percent to $8.89 billion, in line with analysts' estimates.
Net income from continuing operations rose to $259 million, or 70 cents per share, from $203 million, or 57 cents per share, a year earlier.
Analysts on average had expected earnings of 69 cents per share.
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