NEW YORK (AP) -- Executives of Tyson Foods Inc. predict improvements in the meat industry will continue for the rest of this year and into fiscal 2011 as customers slowly return to dining out and cooking more chicken and beef at home.
"We've posted strong results in the first half of our fiscal year, and we expect the second half to be even better," CEO Donnie Smith told investors at a conference Wednesday. "The operating environment is good now, and we expect it to continue into next year."
Last week the nation's largest meat producer reported a return to profitability in its second quarter on a recovery in its chicken business and higher beef and pork revenue. The industry has been working through a downturn brought on by a combination of high production costs -- because of volatile commodity prices -- and slumping demand as shoppers pulled back on their spending. That crimped profit margins and forced companies to cut production to raise prices, a move that is now paying off for Tyson.
The Springdale, Ark., company has cut its debt position and tightened its operations, Smith told investors at the BMO Capital Markets 2010 Agriculture, Protein and Fertilizer Conference. The company has raised its outlook for normalized operating margin ranges in its beef and pork units, and its prepared foods segment looks to be improving following structural changes made last year.
The chicken segment, which had been hit by oversupply and consumer spending cuts, continues to recover and should fall within its normalized operating margin range of between 5 percent and 7 percent for the year.
"We're already seeing better results from our chicken segment, and we've still got runway left for improvement," Smith said.
Shares of Tyson rose 5 cents to $17.86 in morning trading Thursday.