Tyson Foods announced its results for the first quarter. The company reported record sales of $10.8 billion, an increase of 23% over first quarter of prior year.

"Tyson's fiscal year is off to a great start with our first full quarter as a combined company producing record sales and adjusted operating income," said Donnie Smith, president and chief executive officer of Tyson Foods. "We used our strong cash flows to pay down debt by $650 million in the quarter.

"We achieved $60 million in synergies in the first quarter, and we are confident we will exceed the $225 million synergy target for this fiscal year. We also reiterate our guidance of adjusted earnings in the range of $3.30-3.40 per share based on the strength of our diversified and balanced business model.

"We are proceeding with the integration of Hillshire Brands. I want to thank our team members for their ability to quickly focus on the business as we brought the two companies together. The first quarter was a crucial time, and the team handled it well. Their efforts will be vital to our success going forward, and I don't think Tyson Foods could be in a better position. We've set ourselves up for another record year, and we are building momentum that will take us into fiscal 2016."

Sales volume in its chicken segment grew as a result of stronger demand for chicken products. Average sales price increased as a result of market conditions and sales mix changes. Operating income increased due to higher average sales price and volumes in addition to lower feed ingredient costs which decreased $110 million during the first quarter of fiscal 2015.

Beef sales volume decreased due to a reduction in live cattle processed. Average sales price increased due to lower domestic availability of beef products. Operating income decreased due to higher fed cattle costs and periods of reduced consumption of beef products, which made it difficult to pass along increased input costs, as well as lower sales volumes and increased operating costs.

Increased demand for Tyson’s pork products drove higher average sales price and sales volume.

“Additionally, our average sales price increased due to lower total hog supplies which resulted in higher input costs,” the company said in a statement. “Operating income remained strong as we maximized our revenues relative to live hog markets, partially attributable to operational and mix performance.”

Sales volume from the prepared foods segment increased primarily due to incremental volumes from the acquisition of Hillshire Brands as well as improved demand for Tyson’s prepared foods products. Average sales price increased due to price increases associated with better product mix which was positively impacted by the acquisition of Hillshire Brands, as well as increased prices associated with higher input costs.

“Despite incurring $10 million of higher raw material costs related to our legacy Prepared Foods business along with $40 million of ongoing costs related to a legacy Hillshire Brands plant fire and merger and acquisition costs, operating income improved due to an increase in sales volume and average sales price mainly attributed to Hillshire Brands. Additionally, Prepared Foods operating income was positively impacted by $55 million related to profit improvement initiatives and Hillshire Brands synergies,” Tyson said

Internationally, sales volume decreased due to the sale of the Brazil operation during the first quarter of fiscal 2015. Average sales price decreased due to supply imbalances associated with weak demand in China. Operating loss improved due to the sale of the Brazil operation and better market conditions in Mexico.

In fiscal 2015, Tyson said it expects overall domestic protein production (chicken, beef, pork and turkey) to increase approximately 1% from fiscal 2014 levels. Grain supplies are expected to increase in fiscal 2015, which should result in lower input costs as well as decreased costs for cattle and hog producers. The company said it expects its total sales for 2015 to be $42 billion.

Source: Tyson Foods Inc.