Tyson Foods Inc., the largest U.S. meat producer, raised its fiscal full-year profit forecast after declines in the cost of feed and animals boosted margins.
Tyson now sees earnings excluding one-time items of $4.20 to $4.30 a share in the year through September, the Springdale, Arkansas-based company said in a statement Monday. That compares with a previous projection of $3.85 to $3.95 and exceeds the $4.06 average of 13 analysts’ estimates compiled by Bloomberg. Tyson maintained its sales forecast of about $37 billion. The shares rose 4.1 percent in pre-market trading In New York.
Tyson said it saw record operating margins in its fiscal second quarter for the company’s chicken and pork businesses. Ample supplies of corn and soybeans over the past year have meant cheaper feed for Tyson’s chickens. The company also benefited from lower prices for the animals it slaughters and processes at its plants, including cattle.
The company has stepped up cost cuts, finding $144 million of savings in its fiscal a second quarter, which ended April 2, $67 million more incrementally from a year earlier. Tyson, which bought Hillshire Brands Co. in 2014, said it expects more than $500 million of savings in the 2016 fiscal year and more than $700 million in fiscal 2017 from the deal.
Tyson reported second-quarter net income of $1.10 a share, compared with 75 cents a year earlier. Profit excluding one-time items was $1.07, beating the 96-cent average estimate. Sales fell to $9.17 billion from $9.98 billion, beating the $9.03 billion average estimate.
The shares rose to $70 at 7:50 a.m. in New York.