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Tyson sees recovery in meat industry

Executives of Tyson Foods predict improvements in the meat industry will continue for the rest of this year and into fiscal 2011 as customers return to dining out and cooking more chicken and beef at home.

"We've posted strong results in the first half of our fiscal year, and we expect the second half to be even better," said company CEO Donnie Smith. "The operating environment is good now, and we expect it to continue into next year."

Tyson Foods recently reported a return to profitability in its second quarter on a recovery in its chicken business and higher beef and pork revenue. The industry has been working through a downturn brought on by a combination of high production costs - because of volatile commodity prices - and slumping demand as shoppers pulled back on their spending. That crimped profit margins and forced companies to cut production to raise prices, a move that is now paying off for Tyson.

Smith said that the chicken segment, which had been hit by oversupply and consumer spending cuts, continues to recover and should fall within its normalised operating margin range of 5-7% for the year.

"We're already seeing better results from our chicken segment, and we've still got runway left for improvement," Smith said.

Source: Yahoo Finance

Natalie Berkhout

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