Tyson Foods Inc. reported its results for the fourth quarter and fiscal 2011. The company achieved record sales in the fourth quarter of $8.4 billion, up 12.9 percent compared to last year. Beef operating income stood at $118 million, while pork operating income was $113 million and prepared foods was $28 million. Tyson's chicken operations had an operating loss of $82 million.

For the fiscal year, Tyson has sales of $32.266 billion, up from 2010's sales of $28.43 billion. Operating income dropped however, from $1.556 billion in 2010 to $1.285 billion in 2011.

"In fiscal 2011, we produced record sales and our second best EPS in company history despite record input costs, which included $675 million in additional feed and ingredient costs in our Chicken segment," said Donnie Smith, Tyson's president and CEO. "This is a testament to our quality, service and innovation and our focus on business fundamentals and operational efficiencies across all segments of our business.

"We will continue to build on the progress we've made in recent years and expect 2012 to be another strong year," Smith said. "Midway into our first fiscal quarter, all segments are profitable."

Smith said that he expected 2012 sales to exceed $34 billion, mostly due to price increases related to decreases in domestic availability of protein and rising raw material costs.

Smith said that for fiscal 2012, the company expects industry chicken production will decrease approximately 4% from fiscal 2011, which should gradually improve market pricing conditions. Current futures prices indicate higher grain costs in fiscal 2012 compared to fiscal 2011.

“We expect to offset the increased grain costs with operational, pricing and mix improvements,” he said. “Our Chicken segment is currently profitable and we expect it to strengthen throughout the year.”

In the beef segment, Smith said, “We expect to see a gradual reduction in fed cattle supplies of 1-2% in fiscal 2012 as well as exports to remain strong as compared to fiscal 2011. Despite reduced domestic availability, we expect adequate supplies in the regions we operate our plants. Although current weak industry fundamentals are challenging our Beef business, we expect it to be profitable in the first quarter. We anticipate the fundamentals will strengthen throughout the year and our Beef segment will be in our normalized range for fiscal 2012.”

Tyson expects hog supplies in fiscal 2012 to be comparable to fiscal 2011 and to be adequate in the regions in which it operates. Additionally, the company expects pork exports to remain strong in fiscal 2012.

Tyson is preparing for an anticipated increase in raw material costs in its prepared foods segment and is hoping to offset that increase with operational improvements and increased pricing.

“Because many of our sales contracts are formula based or shorter-term in nature, we are typically able to offset rising input costs through increased pricing,” Smith said. “However, there is a lag time for price increases to take effect. We expect improved Prepared Foods profitability for fiscal 2012 primarily due to improvements in our lunchmeats business.”

Source: Tyson Foods Inc.