Tyson Foods (TSN) doubled its earnings on Monday and topped expectations in the fourth quarter despite softer sales.
The No. 1 U.S. meat producer also forecast higher protein costs in 2013, which it says will help alleviate some of the pressure on grain costs.
The Springdale, Ark.-based meat producer posted net income of $181 million, or 51 cents a share, compared with a year-earlier profit of $95 million, or 26 cents.
Excluding one-time items, Tyson earned 55 cents, topping average analyst estimates of 44 cents in a Thomson Reuters poll.
Sales for the three-month period ended Sept. 29 fell to $8.37 billion from $8.4 billion a year ago, missing the Street’s view of $8.48 billion. Tyson said higher prices for chicken could not wholly offset a sharp volume decline in beef and soft pork prices.
"Our earnings for the fourth quarter and fiscal year indicate that Tyson Foods is rising above the noise of commodity markets to produce solid, more consistent results," Tyson CEO Donnie Smith said in a statement. "It has taken us several years and a lot of work to get to this point, and although there is much more to be done, I believe we have reached a new level of sustainable performance.”
Looking toward fiscal 2013, Tyson said capital investments, strong liquidity and reduced interest expense has put it in a better position to begin the challenging new year.
At the same time, prices are expected to continue improving, with the U.S. Department of Agriculture forecasting a 2% decrease in domestic protein production.
While grain costs are forecast to be higher in 2013 as a reflection of this past summer’s drought, Tyson said certain capital investments as well as higher meat prices will help offset the increase.