Aug. 3 (Bloomberg) -- Tyson Foods Inc., the world’s largest meat producer, said profit climbed more than 10-fold in the third quarter as chicken prices increased.

Net income rose to $134 million, or 35 cents a share, in the quarter ended June 27, from $9 million, or 3 cents, a year earlier, Springdale, Arkansas-based Tyson said today in a statement. Sales fell 2.7 percent to $6.66 billion.

Chicken producers reduced output by about 6.3 percent in the first half of this year from a year earlier, based on U.S. Department of Agriculture broiler hatchery data. Tyson cut chicken production by 5 percent in December and benefited from lower corn- and soybean-feed costs.

“Tyson has refocused on chicken margins, and the benefits are coming quickly and meaningfully,” Kenneth Goldman, an analyst at JPMorgan Chase & Co., said today in a note. He rates the shares “neutral” and estimated profit excluding one-time items of 17 cents a share.

Excluding one-time items, Tyson’s profit was 33 cents a share, topping the 22-cent average estimate of 10 analysts in a Bloomberg survey. Sales were estimated to be $6.67 billion.

Tyson fell 18 cents, or 1.6 percent, to $11.25 at 11:15 a.m. in New York Stock Exchange composite trading. The shares rallied 30 percent this year before today.

The chicken unit, which accounted for a third of last year’s sales, had an operating profit of $143 million compared with a $30 million loss a year earlier. Average prices were 2 percent higher, and sales volumes gained 5 percent, Tyson said.

Tyson Chief Executive Officer Dick Bond resigned Jan. 5 as the U.S. chicken industry struggled with higher grain-feed costs and falling demand that forced rival Pilgrim’s Pride Corp. into bankruptcy.

Soft Protein Demand

“Soft demand for protein is likely to make the fourth quarter more challenging than the third quarter,” Leland Tollett, who succeeded Bond on an interim basis until a new CEO is found, said in the statement. Tollett had served as Tyson’s CEO from 1991 to 1998.

Corn, which reached a record $7.9925 a bushel in 2008, averaged 36 percent lower during the quarter than a year before as demand slumped for food, livestock feed and ethanol. Soybean prices, which reached a record $16.3675 a bushel last year, averaged 22 percent lower.

Operating profit in the beef unit rose more than seven-fold to $66 million, boosted by $82 million from risk management related to cattle futures, Tyson said.

Operating profit for pork plunged 51 percent to $28 million as prices fell 10 percent. Tyson said on July 15 it would sell five farms and reduce its hog-breeding herd by 29 percent because of falling pork demand.

Profit from prepared food more than quadrupled to $40 million.

To contact the reporter on this story: Choy Leng Yeong in Seattle at clyeong@bloomberg.net.

Last Updated: August 3, 2009 11:16 EDT