Tyson Foods Inc. reported its results for the fourth quarter and year-end results. Sales for the 4th quarter were $9.156 billion, a drop from $10.506 billion last year. Net income rose from $259 million to $392 million. For the fiscal year, sales dropped from a record $41.373 billion in 2015 to $36.881 billion. Operating income rose to $2.833 billion (from $2.169), and net income rose to $1.772 billion (from $1.224 billion).

“Fiscal 2016 was our fourth consecutive year of record results,” said Donnie Smith, outgoing chief executive officer of Tyson Foods. “We produced record earnings per share, operating income and operating margin. We’re growing where we want to grow by selling more branded, higher margin products. Sales volume was up in our Core 9 product lines at retail and our top tier products in foodservice.

“The Prepared Foods segment had a record margin for the year, while simultaneously driving industry-leading category growth at retail. The Pork segment had a record year as well, while the Chicken segment nearly matched last year’s record margin. The Beef segment is a great turnaround story, producing normalized margins for the year,” Smith said.

“Synergies and profit improvement for the fiscal year totaled $580 million, well exceeding our $500 million target,” Dennis Leatherby, Tyson Foods’ executive vice president and chief financial officer, said.

“Our business generated record cash flows that give us the flexibility to drive long-term shareholder value. Our priorities for capital allocation continue to be investing in our existing businesses, acquiring businesses that support our strategic objectives and returning cash to shareholders through share repurchases and dividends, all while prudently managing our debt profile.

“In fiscal 2016, we repurchased more than 28 million shares of our stock for $1.7 billion. This week the Board of Directors increased the quarterly dividend by $0.075, or 50%, to $0.225 per share. This continues our expectation to increase dividends for Class A shares by at least $0.10 per share annually,” Leatherby said.

“Looking forward, we will continue building this business for long-term, sustainable growth by investing in innovation, consumer insights, our brands, our customer relationships, our facilities and our people,” Tom Hayes, current president of Tyson Foods and incoming CEO, said. “In addition to allocating $1 billion for capital expenditures in fiscal 2017, we are investing in initiatives such as improved worker safety, food safety, animal well-being, warehouse and distribution optimization and attracting and retaining talent throughout our company. These investments will pay off in the coming years through, among other things, improved costs and reduced turnover.”

“The first seven weeks of fiscal 2017 have been phenomenal as we are off to the best start we have ever experienced. We’re confident we can increase the investment in our business while still growing and delivering another record year with earnings in the range of $4.70-$4.85 per share,” Smith said. “We are in a great position now, and we're positioning ourselves for long-term success.”

Year-end sales for Tyson decreased across all protein segments. Chicken suffered the biggest drop, decreasing 2.6% for the year and 10.1% for the fourth quarter. Pork dropped 2.5% in sales and 6.8% for the year, while beef decreased %1.1% for the year and 7.4% for the quarter.

“In fiscal 2017, USDA indicates domestic protein production (chicken, beef, pork and turkey) to increase approximately 2-3% from fiscal 2016 levels and moderate export growth,” the company said in a statement. “As we continue with the integration of Hillshire Brands, we expect to realize synergies of around $675 million in fiscal 2017 from the acquisition as well as our profit improvement plan for our legacy Prepared Foods business. The amount expected to be realized in fiscal 2017 is reduced from our previous estimate of $700 million as some of the incremental synergies are now expected to be realized in fiscal 2018. The majority of these benefits will be realized in our Prepared Foods segment.”

Source: Tyson Foods Inc.