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Tyson Beefs Up Bottom Line

The meat producer posts a stronger-than-expected profit and boosts guidance. Shares jump.
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Tyson Foods

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swung to a stronger-than-expected second-quarter profit amid improvements across all of its segments.

The meat producer also boosted its full-year earnings forecast. Shares were trading up 74 cents, or 3.5%, to $21.94.

For the quarter ended March 31, Tyson recorded a profit of $68 million, or 19 cents a share, compared with a year-earlier loss of $127 million, or 37 cents a share. Sales rose to $6.5 billion from $6.25 billion.

The results beat analysts' forecast for earnings of 11 cents a share and sales of $6.4 billion.

Tyson, which spent last year battling an oversupply in the chicken market and pricing pressure in the beef business, said quarterly operating income improved $300 million year over year.

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"All segments were profitable, and it was our strongest performance since the fourth quarter of fiscal 2005," said President and CEO Richard Bond. "Our beef segment is back in the black, and our pork business is well within our target margin objectives. Chicken showed improvement despite a substantial year-over-year increase in grain costs."

Tyson's beef business saw second-quarter sales rise to $3 billion from $2.85 billion, while it swung to an operating profit of $24 million from a year-ago loss of $188 million.

Chicken sales inched up to $2.03 billion from $2.01 billion, as a 9.1% jump in prices offset a 7.2% decline in volume. Operating profits soared to $61 million from $9 million.

In pork, sales rose to $805 million from $729 million. Pork profits climbed to $35 million from $9 million.

For the full fiscal year, Tyson now expects earnings of 65 cents to 90 cents a share. Previously, the company projected earnings of 50 cents to 80 cents a share.

Wall Street expects earnings of 73 cents a share for the year ending in September.

Tyson also said it is on track to exceed its target for $200 million in cost savings in fiscal 2007.