Tyson reports modest gains in Q1 report
Tyson Foods Inc. has released its first-quarter results. Its sales for the first quarter of FY 2020 are $10.815 billion, an increase of 6 percent from 2019’s total of $10.193 billion. Operating income increased from $807 million to $826 million, and net income increased from $552 million to $561 million.
“Our overall results in the first quarter of fiscal 2020 were in line with expectations,” said Noel White, Tyson Foods’ CEO. “Our Beef and Pork segments performed well as the effects of African swine fever are beginning to materialize. Our Chicken segment performed better operationally, although in a soft pricing environment. Our Prepared Foods segment produced its sixth consecutive quarter of retail consumption growth, demonstrating the strength of our brands and innovation as we grew or held market share in all core categories.
“With improved access to global markets resulting from recent trade developments, there are reasons to be optimistic about fiscal 2020 and beyond and we are well-positioned to capitalize on opportunities in the global marketplace. Although we anticipate the challenges and volatility typical in our second fiscal quarter, our long-term outlook remains positive.”
Summary of Segment Results
Beef - Sales volume decreased due to a reduction in live cattle harvest capacity as a result of a fire that caused the temporary closure of a production facility for the majority of the first quarter of fiscal 2020. Average sales price increased as beef demand remained strong. Operating income increased as Tyson continued to maximize our revenues relative to live fed cattle costs, partially offset by increased operating costs and $16 million of net incremental costs from a production facility fire.
Pork - Sales volume increased due to increased domestic availability of live hogs and strong demand for Tyson’s pork products, the company said. Average sales price increased associated with higher livestock costs and stronger export markets. “Operating income increased as we maximized our revenues relative to the live hog markets, partially attributable to favorable export markets and improved operational performance, which were slightly offset by higher operating costs,” the report stated.
Chicken - Sales volume increased primarily due to incremental volume from a business acquisition, partially offset by lower volume from our rendering and blending business. Average sales price increased due to lower rendering and blending sales, which carry a lower average sales price, largely offset by broadly weaker chicken pricing as a result of market conditions. Operating income decreased primarily from challenging pricing conditions. Additionally, operating income in the first quarter of fiscal 2020 was impacted by $21 million in restructuring costs.
Prepared Foods - Sales volume decreased as growth in volume across the consumer products business was offset by other intersegment sales channel shifts. Average sales price increased due to favorable product mix and the pass through of increased raw material costs. Operating income decreased primarily due to increased operating costs, including an $80 million increase in raw material costs. Additionally, operating income in the first quarter of fiscal 2020 was impacted by $22 million in restructuring costs.
Source: Tyson Foods Inc.