(Bloomberg) -- Tyson Foods Inc. shares surged, bucking a broad retreat in equity markets, as quarterly earnings beat the highest of analyst estimates on a rebound in chicken profits.
Earnings excluding some items were 87 cents a share for the three months ended June, almost six times higher than a year earlier and above the 67-cent average of analyst estimates compiled by Bloomberg. Tyson’s poultry business made 307 million in operating profits in the quarter, the highest since 2016 for a fiscal third quarter and roughly 62% of the company’s total.
Tyson raised the midpoint of its outlook range for 2024 adjusted operating income by $100 million to $1.7 billion, mostly driven by improved estimates for its chicken business.
Shares gained as much as 4.4% to the highest level since February 2023, before paring some of the gains. The meat giant was among the top five gainers in the S&P 500 index, which slumped as much as 4.3%.
The latest Tyson’s result was the highest since the last quarter of 2022, and underscores a stronger-than-expected recovery in the chicken industry. Producers are benefiting from lower prices for corn and soybeans, which are used to feed birds, and stronger consumer demand.
The performance also comes amid Tyson’s efforts to improve profitability, which included the shutdown of several plants last year and the reintroduction of antibiotics use in animals. The company said capacity use at its chicken operations surged to the highest since the fourth quarter of 2018, with egg fertility and bird livability indicators also improving.
“The operational improvements we have been driving are enabling us to benefit from the market tailwinds,” Chief Executive Officer Donnie King said during the conference call.
Tyson reported a $69 million loss in its beef business, which has struggled with a shortage of cattle in the US and soaring costs for slaughter-weight animals. While pasture conditions have improved this year, “clear signs of meaningful herd rebuilding have not emerged,” meaning supplies are not expected to rebound anytime soon, King said.
The company’s pork operation — which also benefits from lower grain prices — reversed year-earlier losses, beating analyst estimates. The prepared food business, which produces sausages and snacks under brands such as Wright and Jimmy Dean, saw slightly lower profits than a year earlier.
The results are the first since John Tyson, a member of the family who controls the meat giant and a potential successor to Chief Executive Officer Donnie King, was suspended from his role as chief financial officer after a June arrest for allegedly driving while intoxicated.
(Updates with share price move and more details throughout.)
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