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By Tom Polansek, Neil J Kanatt and Heather Schlitz
(Reuters) -U.S. meatpacker Tyson Foods raised its annual sales forecast on Monday as strong demand for beef and chicken helped it exceed first-quarter results estimates, lifting shares 3%.
The chicken nuggets and Ball Park hot dogs manufacturer has improved its poultry business after struggling to predict demand and shuttering plants that employed thousands of workers. A gradual recovery in restaurant traffic and sustained eat-at-home trends have supported demand.
However, Tyson faces threats from tariffs that U.S. President Donald Trump plans for Mexico, Canada and China, as well as tight supplies of U.S. cattle. Trump said on Monday he agreed to pause anticipated tariffs with Mexico for one month.
Tyson considered tariff risks when it lifted its annual adjusted operating income forecast range to between $1.9 billion and $2.3 billion, from $1.8 billion to $2.2 billion expected earlier, CEO Donnie King told analysts on a call.
The company, which benefits from relatively cheap costs for U.S. grains used to feed chickens, now expects fiscal 2025 sales to be flat to up 1%, compared with flat to down 1%.
Tyson has done contingency planning for sales of U.S. pork and poultry to Mexico due to concerns over Trump's tariffs, and would move those products to other markets if necessary, King said.
"We've been preparing for this, making adjustments. We now have to execute some of those things," he said.
Trump's planned 25% tariffs on Canada and Mexico and 10% tariffs on China could help keep grain costs low by triggering retaliation that reduces global demand for U.S. crops, analysts said.
However, the duties could further increase record prices for cattle processed by Tyson, as the U.S. imports livestock from Mexico and Canada. Tit-for-tat tariffs could also hurt demand for Tyson's meat as Mexico is the biggest export market for U.S. pork, analysts said.
Trump is also cracking down on illegal immigration, though King said Tyson has not seen any raids by immigration authorities on its facilities or a decline in worker attendance in the wake of mass deportation plans.
On an adjusted basis, Tyson earned $1.14 per share in the first quarter ended Dec. 28, compared with estimates of 88 cents.
Sales in its beef unit, the company's biggest business, rose 6.2% as cattle are being raised to heavier weights after farmers slashed their herds due to drought.
Improving pasture conditions provide an opportunity to increase herds, said Brady Stewart, who leads Tyson's beef and pork businesses.