(Reuters) - Tyson Foods Inc (TSN.N) posted higher-than-expected quarterly earnings and gave an upbeat forecast on Monday as the nation’s largest meat company adds more higher-priced prepared foods to its portfolio.
Shares of Tyson rose nearly 9 percent in morning trade.
The worst U.S. drought in more than half a century earlier this year made animal feed more expensive, leading meat producers to reduce the size of some of their herds.
For the year, cuts in production reduced the company’s total domestic slaughter by 4 percent. The reduced supply led to higher prices, which helped Tyson.
“Fiscal 2013 is likely to be equally if not more difficult, but there will always be challenging circumstances in this business,” said Tyson Chief Executive Donnie Smith.
Smith said fiscal 2013 earnings would be flat with the $1.91 per share it earned in fiscal 2012, which ended on September 29. Analysts, on average, expected $1.58 per share for 2013, according to Thomson Reuters I/B/E/S.
For fiscal 2014 and 2015, Tyson, which sells chicken, beef and pork, sees annual earnings growth of about 10 percent.
The company also forecast sales growth of 3 percent to 4 percent for the next few years as it pushes further into “value-added” poultry and prepared foods and international businesses.
For the just-ended fourth quarter, Tyson’s profit rose to $185 million, or 51 cents per share, from $97 million, or 26 cents per share, a year earlier.
Excluding a $15 million charge for the impairment of non-core assets in China, earnings were 55 cents per share. On that basis, analysts, on average, expected 44 cents, according to Thomson Reuters I/B/E/S.
Sales fell to $8.37 billion from $8.40 billion a year earlier. Analysts looked for $8.48 billion.
The company forecast fiscal 2013 sales of $35 billion, helped by price increases tied to the reduced meat supplies and rising raw material costs. Analysts targeted $34.70 billion.
Tyson shares rose $1.50 to $18.38 on the New York Stock Exchange.
Reporting by Martinne Geller in New York and Lisa Baertlein in Los Angeles; Editing by Jeffrey Benkoe and John Wallace