Tyson Foods has reported its Q2 fiscal results. The company achieved sales of $10.443 billion, an increase from last year’s totals of $9.773 billion. For the first six months of the year, the company’s sales figures stand at $20.636 billion, an increase from last year’s totals of $20.002 billion.
“I’m pleased with our direction as we begin the back half of the year,” said Noel White, Tyson’s president and CEO. “The Prepared Foods segment produced its second consecutive quarter of record return on sales. Both the Beef and Pork segments were solid performers, while the Chicken segment is poised for improvement following what we believe are its margin lows for the year.
“Looking ahead, African Swine Fever has the potential to impact the global protein industry on a level that we have never experienced, and it is an event that will underscore the power of the Tyson business model. While Tyson’s diversity across segments provides stability and puts us in a position to capitalize when opportunities arise, all proteins could see a benefit. A worldwide decrease in pork supply would offer significant upside to our pork business, while also lifting the chicken and beef businesses as substitutes and increasing raw material costs in our prepared foods business.
“Our forecasts for the current fiscal year do not include any potential effects from ASF as we do not have clarity on when the impact might occur or what the magnitude could be. To date, pork pricing hasn’t kept pace with increased hog costs, leading us to believe any positive ASF impact would occur in late fiscal 2019 into fiscal 2020 and beyond. For these reasons, we are maintaining our guidance for fiscal 2019 in the range of $5.75-6.10 adjusted earnings per share, and we will stay focused on the long-term by growing our business on the strength of our leading brands and our diversified business model.”
In the prepared foods segment, sales volume decreased for the six months and second quarter of fiscal 2019 primarily from business divestitures. Average sales price increased for the six months and second quarter of fiscal 2019 due to product mix which was positively impacted by business divestitures. Operating income increased for the six months and second quarter of fiscal 2019 due to strong demand for our products, improved product mix and lower raw material costs, partially offset by increased operating and labor costs. Additionally, operating income was impacted in the second quarter of fiscal 2018 by a one-time cash bonus to frontline employees of $19 million and a $75 million impairment associated with the divestiture of non-protein business.
For fiscal 2019, USDA indicates domestic protein production (beef, pork, chicken and turkey) should increase approximately 2% from fiscal 2018 levels, but Tyson said it expects export markets should absorb a portion of the increased production.
Source: Tyson Foods Inc.