DOW JONES NEWSWIRES 
 

Tyson Foods Inc.'s (TSN) fiscal third-quarter earnings surged, topping analysts' expectations, amid rising chicken prices and volumes as well as falling grain costs and inventories.

Chief Executive Leland Tollett said all of the company's segments were profitable in the quarter, but warned soft demand will likely to make the current quarter more challenging. Still, "I'm feeling much better about our position than I would be if we were sitting on a lot of inventory," Tollett said.

The meatpacker has posted losses in the two prior quarters as demand plunged, partly because of recession-hit restaurants' woes. Internal tension at Tyson about how to navigate the meat-industry slump led to changes at the helm, with Tollett taking back the chief executive's job on an interim basis in January.

Tyson cut production late last year, planning to tweak its product mix, while predicting a fiscal second-half profit. The company in recent months planned to reduce its hog herd by 30% and sell five of its swine operations amid weak demand.

When Tyson reported first-quarter results in May, the company said its chicken segment returned to profit and that grain-hedging efforts that backfired when commodity prices slumped were "mostly behind us."

For the quarter ended June 27, the meatpacker reported a profit of $134 million, or 35 cents a share, up from $9 million, or 3 cents, a year earlier. Revenue decreased 2.7% to $6.66 billion as volume rose 3.1%.

Analysts polled by Thomson Reuters most recently were looking for earnings of 22 cents on revenue of $6.68 billion.

Gross margin rose to 7.1% from 3.8% amid the sales gains and eased commodity pressures.

Chicken sales volume rose 5% as average prices climbed 2%. The segment saw earnings rise 5.9%, in contrast with the losses in recent quarters. Beef sales volume, Tyson's largest segment, rose 2.6%, though average prices were down 11%. Still earnings were up 2.4%.

Shares closed at $11.43 on Friday and didn't trade premarket. The stock has lost nearly a quarter of its value in the past year, though it has more than doubled from a two-decade low in November.

-By Tess Stynes, Dow Jones Newswires; 212-416-2481; tess.stynes@dowjones.com