Tyson Foods Inc., the largest U.S. meat company, raised its full-year revenue forecast above analysts' average estimate as strong beef and chicken prices help offset grain costs pushed higher by last summer's historic U.S. drought.
Tyson shares climbed 3 per cent on Friday after the company also reported better-than-expected earnings for its fiscal first quarter.
The average price per pound for beef sold during the quarter, ended Dec. 29, was up 11.7 per cent from a year earlier, while chicken was up 8.2 per cent. Pork fell 5.5 per cent.
Volume for all three meats fell during the quarter. Beef had the steepest drop at 10 per cent, while pork was down 5.5 per cent and chicken was off 1.1 per cent.
Springdale, Ark.-based Tyson forecast a 1-per-cent decline in overall domestic protein production, including chicken, beef, pork and turkey, for its full fiscal year.
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, in January said it would close its Plainview, Tex., beef plant as cattle remains in short supply.
"We are on our way to producing earnings this year better than fiscal 2012," Tyson chief executive officer Donnie Smith said on Friday.
That was more bullish than Tyson's previous guidance for earnings "similar" to those of the past couple years, JPMorgan analyst Ken Goldman said in a client note.
Tyson forecast full-year revenue of $35-billion (U.S.), in line with analysts' average estimate $34.65-billion, according to Thomson Reuters I/B/E/S.
The company's fiscal first-quarter profit rose almost 11 per cent to $173-million or 48 cents per share. Analysts had expected 42 cents per share.
Sales rose to $8.40-billion from $8.33-billion a year earlier, missing analysts' view of $8.60-billion.