Tyson Foods Inc. said Monday that its profit fell 21 percent for its third fiscal quarter on higher grain costs and lagging results from its chicken business.
An oversupply in the poultry industry has kept prices depressed. Poultry demand has remained stubbornly low as cash-strapped families cut back on restaurant dining and prepared meals that once underpinned chicken sales.
At the same time, the cost of feeding a chicken has soared more than 10 cents a pound since 2009 because of sharply higher corn and soybean costs, according to the Springdale, Ark., company.
"The situation our industry is in today is unsustainable," Tyson CEO Donnie Smith told investors during a conference call Monday morning.
Smith predicted that Tyson's chicken division would post a loss during the fourth quarter. But as unprofitable companies cut their output, supply should fall and prices should strengthen during 2012, he said.
The largest U.S. meat company said its net income fell to $196 million, or 51 cents per share, in the three months ended July 2, down from $248 million, or 65 cents per share, a year earlier.
Revenue rose 11 percent to $8.25 billion from $7.44 billion a year ago.
The earnings beat the average forecast from analysts surveyed by FactSet of 40 cents per share on $8.27 billion in revenue.
Tyson's pork division reported higher sales than many analysts expected.
Pork sales jumped 3 percent, while prices rose 9 percent. That boosted profits in the swine division to 8.8 percent, compared to 1 percent for chicken.
Chicken sales remained stagnant, growing less than 1 percent from last year. The profit margin on poultry was 1 percent, down from 7.4 percent during the same period last year.
Beef prices rose 13.5 percent during the quarter, even as sales fell by 1.7 percent.
Tyson's shares rose 20 cents to $16.51 in morning trading despite a broad decline on the stock market. The stock traded as high $16.78.