* Q2 profit 42 cents/share vs year-ago loss 32 cents
* Rev $6.9 bln vs $6.3 bln
* Beef, pork, chicken prices increase
* Raises FY2010 capex $100 mln to $700 mln
* Better results seen in second half
(Rewrites, adds company and analyst comment, share price)
By Bob Burgdorfer
CHICAGO, May 10, Tyson Foods Inc (TSN.N) posted
a better-than-expected quarterly profit as smaller meat
supplies pushed up prices and the meat producer predicted a
stronger second half helped by the summer grilling season.
Shares of the Arkansas-based company, which on Friday were
up 52 pct year-to-date, rose as much as 4 percent early on
In a conference call with analysts, the company predicted
meat supplies should remain tight for the "next couple of
years." Moreover, it has seen evidence of increased consumer
spending particularly at casual dining restaurants.
"You can not simply flip the switch and start to rebuild
the infrastructure to grow the supplies back," Tyson Chief
Operating Officer Jim Lochner told analysts.
Livestock and chicken producers slashed production
beginning in 2008, first because of high feed costs and later
as the recession slowed meat sales. Now, the smaller meat
supply has helped push up prices.
"We think we'll do even better the second half of the
fiscal year as our operational performance continues to
improve. We are very pleased with how our third quarter is
going, and the summer grilling season is just getting started,"
Chief Executive Donnie Smith said in a statement.
Tyson declined to say if it would ramp up chicken
production to match increases planned by rivals Pilgrim's Pride
Corp PPC.N and Sanderson Farms Inc (SAFM.O), but said it will
match production with customer needs.
For the quarter, chicken prices at Tyson were up 10.2
percent from a year earlier, beef up 8.4 percent and pork up 15
"We think this will be a good day for Tyson," J.P. Morgan
analyst Ken Goldman said in a note. "The strong earnings,
healthy guidance and use of cash to clean the balance sheet
are, in our opinion, good indicators as a whole for the
direction of the entire industry."
Tyson shares rose 20 cents to $18.82 after trading as high
as $19.40. Sanderson shares rose 3.8 percent and Pilgrim's
gained 1.1 percent.
BEATING WALL STREET ESTIMATES
Tyson reported a profit of $159 million, or 42 cents per
share, for the second fiscal quarter ended April 3, compared
with a year-ago loss of $119 million, or 32 cents per share.
Earnings before charges amount to 46 cents per share. On
that basis, Wall Street analysts, on average, expected 34 cents
per share, according Thomson Reuters I/B/E/S.
Revenue was $6.92 billion compared with $6.31 billion a
Tyson raised its capital expenditure for fiscal 2010 by
$100 million to $700 million, some of which will be earmarked
for improvements in its chicken production.
Tyson's chicken unit, the nation's largest, earned $114
million, up from a year-ago loss of $46 million, helped by
higher prices that offset a smaller export market.
Russia, the top overseas market for U.S. chicken, halted
imports of all U.S. chicken early this year claiming a chlorine
rinse used by U.S. companies violates its food safety policy.
Tyson's profit on beef, its largest segment, rose to $126
million from $28 million a year ago, due in part to strong
exports to markets like South Korea and Mexico, while its pork
unit earned $69 million versus $29 million a year ago.
The prepared foods unit earned $37 million, compared with
$19 million a year earlier.
(Reporting by Bob Burgdorfer, editing by Dave Zimmerman and