Tyson Foods reported the following first-quarter results: EPS up 47% to $0.72 compared to $0.49 in first quarter of prior year. Sales of $8.8 billion represented an increase of 4.7% over first quarter of prior year, and operating income increased 36% to $412 million.
"I'm very pleased with our strong first quarter results, and I'm confident in my expectations for the full year," said Donnie Smith, president and CEO of Tyson Foods. "We're growing sales and earnings and executing our strategy - including making our third prepared foods acquisition in less than a year - while reinvesting in our existing businesses and buying back shares.
"We're in a position any company wants to be in, which is being able to make deliberate, long-term decisions to create shareholder value," Smith said. "But we're maintaining our sense of urgency, our flexibility and our opportunistic mindset. We're generating momentum that will take us into 2015, 2016 and beyond."
First quarter of fiscal 2013 reflects a discontinued operation which was part of the chicken segment. The results of the company’s segments are as follows:
- Chicken - Sales volumes grew due to increased international production and mix of rendered product sales. The decrease in average sales price was primarily due to lower feed ingredient costs and volatile markets in our international operations, partially offset by mix changes. Operating income was positively impacted by increased sales volume, operational improvements and lower feed ingredient costs of $170 million. These increases were partially offset by losses of approximately $28 million in international operations and decreased average sales price.
- Beef - Sales volumes increased due to better demand for beef products. Average sales price increased due to lower domestic availability of fed cattle supplies, which drove up livestock costs. Operating income increased due to improved operational execution, less volatile live cattle markets and improved export markets, partially offset by increased operating costs.
- Pork - Sales volumes decreased as a result of balancing supply with customer demand and reduced exports. Average sales price increased primarily due to mix changes and lower total hog supplies, which resulted in higher input costs. While reduced compared to prior year, operating income remained strong despite brief periods of imbalance in industry supply and customer demand. Tyson was able to maintain strong operating margins by maximizing its revenues relative to live hog markets, partially due to operational and mix performance.
- Prepared Foods - Sales volumes increased as a result of improved demand for prepared foods products and incremental volumes from the purchase of two businesses later in fiscal 2013. Average sales price grew due to better product mix and price increases associated with higher input costs. Operating income decreased, despite increases in sales volumes and average sales price, as a result of higher raw material and other input costs of approximately $40 million and additional costs incurred as it invested in its lunchmeat business and growth platforms. Because many Tyson’s sales contracts are formula based or shorter-term in nature, the company says it is typically able to offset rising input costs through pricing. However, there is a lag time for price increases to take effect.
Tyson stated that in fiscal 2014, the company expects overall domestic protein production (chicken, beef, pork and turkey) to increase approximately 1% from fiscal 2013 levels. Grain supplies are expected to increase in fiscal 2014, which should result in lower input costs.
Source: Tyson Foods Inc.