Tyson Foods president and CEO Tom Hayes described the company’s fiscal first quarter (three months to 31 December 2016) as the “best start in company history with record earnings, record operating income and record cash flows”.
The meat processor, one of America’s largest, had what Hayes called “tremendous returns” on sales for beef and pork. So high were the returns that beef and pork are now providing fuel for the growth of Tyson Foods’ value-added chicken and prepared foods categories.
Sales of beef increased due to a better availability of cattle supply combined with strong domestic availability and lower livestock costs. Beef operating income was $299m for the quarter, accounting for nearly a third of Tyson Foods’ total operating income.
Poultry income fall
Pork sales increased thanks to strong demand in the US and higher exports. Operating income came to $247m, rising from the $158m reported in 2016.
Poultry sales volume and prices increased. Operating income fell from $358m in Q1 2016, to $268m in the same period this year. Tyson Foods claimed the drop was due to increased marketing, advertising and promotion spend, as well as higher operating costs. These include $23m on compensation and benefit integration expenses.
Total company sales volume increased by 2.4% compared with the same period a year ago, with all segments in volume growth.
‘Record results’
“Tyson Foods again led retail food manufacturers in both sales volume and sales dollars for the 13-week period corresponding with our fiscal first quarter,” said Hayes.
“Not only did we lead in sales volume, we were the only company to show volume growth among the top 10 branded food companies.”
Tyson Foods’ revenue came to $9.18bn in the first quarter of 2017 – a rise on reported revenue of $9.15bn for the same period of 2016.
Operating incoming increased substantially, rising from $776m in 2016 to $982m this year.
Due to what Hayes described as an “outstanding performance” for beef and pork, Tyson Foods has raised its annual earnings per share guidance to $4.90-$5.05.
“We’re on a path toward what we expect to be our fifth straight year of record results,” said Hayes.
“Our path won’t be linear, but our team is focused on delivering long-term growth and creating shareholder value.”