Tyson Foods Inc, the largest U.S. meat company, reported higher-than-expected quarterly earnings after it raised chicken and beef prices to counter higher costs stemming from the U.S. drought, and the company forecast full-year revenue above analysts' expectations.
The company's shares rose as much as 4 percent to a four-year high of $23.00 on the New York Stock Exchange on Friday.
The worst drought in more than 50 years in the U.S. Midwest has pushed up prices for feed corn and led to the smallest cattle supply in more than 60 years.
Cargill Inc, one of the nation's largest beef processors, said in January it would close its Plainview, Texas beef plant as cattle remains in short supply.
Tyson said it expected a 2 percent to 3 percent reduction in industry cattle supplies.
The company said the drought has reduced expected grain supplies, resulting in higher input costs and increased costs for cattle and hog producers. It expects domestic protein production to decrease about 1 percent.
The company forecast full-year revenue of about $35 billion as it increases prices to make up for reduced availability of meat and higher input costs.
Analysts on average were expecting sales of $34.65 billion, according to Thomson Reuters I/B/E/S.
PROFIT BEATS, SALES MISSES
Tyson said profit rose to $173 million, or 48 cents per share, for the first quarter ended Dec. 29, from $156 million, or 42 cents per share, a year earlier. Analysts had expected earnings of 42 cents.
Sales rose to $8.40 billion from $8.33 billion a year earlier, missing analysts' view of $8.60 billion.
Chicken volumes decreased 1.1 percent in the first quarter while beef volumes fell 10 percent.