Tyson Foods Inc on Monday reported a bigger-than-expected jump in quarterly profit on sustained demand for chicken and a rebound in its beef business, and it forecast higher sales for the next fiscal year than analysts have estimated.
The news sent shares of the largest U.S. meat producer to multiyear highs. They were up 4.2 percent at $29.70 in midday trading after rising as high as $29.84.
U.S. meat producers are coming off a tough year when higher feed costs crimped margins. This in turn pushed up meat prices, prompting many shoppers and restaurants to move away from other meats to lower-priced chicken products.
As prices for corn and other feeds ease, companies like Tyson should benefit.
At the same time, restricted supply and stronger exports to Japan should support higher beef prices, D.A. Davidson & Co analyst Timothy Ramey said.
Analysts said higher beef and pork prices should continue to mean increased demand for chicken.
During the latest quarter, beef prices were up 2.9 percent per pound from a year earlier, supported in part by people who will always want their rib eye steaks and other cuts, analysts said.
Springdale, Arkansas-based Tyson forecast fiscal 2014 sales of about $36 billion, about $1 billion higher than the analysts' average estimate, on growth in domestic sales of pre-cooked and other "value-added" chicken products, prepared food sales and international chicken production.
Net income from continuing operations jumped to $249 million, or 69 cents per share, in the third quarter ended on June 29 from $79 million, or 22 cents per share, a year earlier.
Analysts on average had expected earnings of 60 cents per share for the latest quarter, according to Thomson Reuters I/B/E/S.
Chicken sales were up nearly 11 percent at $3.16 billion, while beef sales rose about 7 percent to $3.72 billion.
Pork sales fell 0.9 percent to $1.33 billion.
(Reporting by Lisa Baertlein in Los Angeles and Chris Peters in Bangalore; Editing by Lisa Von Ahn)