NEW YORK (AP) — Meat producer Tyson Foods Inc. posted an 89 percent jump in third-quarter net income, helped by higher beef and pork prices and a chicken business that's recovering.
The company has been working through an industrywide downturn brought on by a combination of higher production costs and slumping demand as shoppers cut back on trips out to eat.
The Springdale, Ark.-based company said its prepared foods unit struggled in the quarter because of rising ingredient costs but still made money.
The company reported net income of $248 million or 65 cents per share in the quarter ending July 3, up from $131 million, or 35 cents per share last year.
Revenue rose 11.6 percent to $7.44 billion.
Analysts expected earnings of 58 cents per share on revenue of $7.26 billion, according to Thomson Reuters.
CEO Donnie Smith said Tyson was able to pay down about $400 million in debt because of the cash it received in the quarter.
The total amount of product the company sold in the quarter rose 1.2 percent, rising in every category except beef, where the figure fell 5.1 percent. Chicken volume rose 8.1 percent and revenue rose 4.5 percent to $2.53 billion, or one-third of revenue, even though prices slipped 3.2 percent. Pork prices jumped 31.6 percent, while beef prices rose 19.5 percent, helping revenue gain in both categories. Prepared foods prices rose 10 percent and revenue gained slightly ahead of that, even as volume rose just 1.4 percent.
Meat producers have been cutting production to recover from the downturn because less product means higher prices. But Tyson said it expects beef, chicken, pork and turkey production to rise in 2011 from this year. It also expects exports to improve in 2011.
Tyson said its grain costs could go higher in fiscal 2011, but it will look at improving operations to keep costs down.
The company also said its raw materials costs for prepared foods are likely to go up next year, although it is moving to shorter-term contracts so it can change prices to reflect higher costs. But for now there is still a lag time for price increases, Tyson said, "which makes it more difficult to absorb the rapidly rising raw materials costs" the company experienced in the third quarter.
