Tyson announces Q4 & year-end results, creates new leadership positions
Tyson Foods Inc. announced its fourth-quarter and year-end results. In the fourth quarter, the company had record sales of $8.9 billion, an increase of 7% over last year. Operating income increased 18% to $416 million. For the 2013 fiscal year, Tyson had record sales of $34.4 billion, an increase of 4% over last year, and operating income increased 7% to $1,375 million
"We had a great fourth quarter, and 2013 was the best year in company history in terms of record sales and earnings per share," said Donnie Smith, Tyson's president and CEO. "The company achieved these results while buying back $550 million in stock, paying more than $100 million in dividends, continuing to build out operations in China and growing our prepared foods business through acquisitions and by entering new product categories.
"A year ago we outlined our expectations for growth. We said you should expect top line sales to grow around 3-4% annually. In fiscal 2013, we grew sales by 4%," Smith said. "This time last year, we projected earnings for fiscal 2013 would be roughly flat to the previous two years but would grow at a rate of at least 10% a year in 2014 and beyond. By overcoming many challenges, we grew adjusted earnings from continuing operations by 15% this year. Sales growth from value-added products was almost 6%, against an aggressive goal of 6-8% growth per year. And finally, we set a goal of growing sales from international production by 12-16% a year, and we beat that goal with 20% growth.
"I'm proud of what we've accomplished, and with every success, we raise the bar higher. Although we've been successful, there is still so much potential," Smith said. "We have a great team that is focused and united. As a leader and as a shareholder, I'm excited about the future of Tyson Foods."
In the chicken segment, sales volumes grew due to increased domestic and international production driven by stronger demand for chicken products. The increase in average sales price in the fourth quarter and 12 months of fiscal 2013 was due to mix changes and price increases associated with higher input costs. Operating income was positively impacted by increased average sales price and volume, improved live performance and operational execution, as well as improved performance in Tyson’s foreign-produced operations. These increases were partially offset by increased feed costs of approximately $30 million and $470 million for the fourth quarter and 12 months of fiscal 2013, respectively.
The company’s beef segment saw sales volume rise in the fourth quarter as it increased production due to sufficient cattle supply and strong demand for beef products. Sales volume decreased for the 12 months of fiscal 2013 due to less outside trim and tallow purchases. Average sales price increased due to lower domestic availability of fed cattle supplies, which drove up livestock costs. Operating income rose due to improved operational execution, less volatile live cattle markets and improved export markets.
Sales volume for the pork segment decreased as a result of balancing supply with customer demand and reduced exports. Demand for pork products improved, which drove up average sales price and livestock cost despite a slight increase in live hog supplies. While reduced compared to the prior year, operating income remained strong in the 12 months of fiscal 2013 despite brief periods of imbalance in industry supply and customer demand.
Sales volume in the prepared foods segment increased as a result of improved demand for prepared products and incremental volumes from the purchase of two businesses in fiscal 2013. Average sales price rose due to price increases associated with higher input costs. Operating income decreased, despite increases in sales volumes and average sales price, as the result of increased raw materials and additional costs incurred as Tyson invested in its lunchmeat business and growth platforms.
“In fiscal 2014, we expect overall domestic protein production (chicken, beef, pork and turkey) to increase approximately 1% from fiscal 2013 levels,” Tyson said in a statement. “Grain supplies are expected to increase in fiscal 2014, which should result in lower input costs. The following is a summary of the fiscal 2014 outlook for each of our segments, as well as an outlook on sales, capital expenditures, net interest expense, debt and liquidity, share repurchases and dividends.”
Tyson announces new leadership positions, retirements
Tyson also announced the creation of several new leadership positions to support future growth in its domestic and international protein and prepared foods businesses. The move aligns with the company’s stated long-term strategy, which is to accelerate growth in the international, poultry and prepared foods arenas through innovation and services while cultivating the best talent in the food industry.
“We have produced exceptional results since fiscal 2010 and are poised for substantial future growth,” said Donnie Smith, president and CEO. “These new positions will bring focus to our growth platforms, reinforce our operational excellence and give our team members broader experience in our company. This further demonstrates our commitment to cultivating and retaining top talent.”
Several new senior leadership positions will report to the CEO:
- President of Prepared Foods, Customer and Consumer Solutions- Donnie King, currently senior group vice president of poultry and prepared foods
- President of Poultry- Noel White, currently senior group vice president of fresh meats
- President of Fresh Meats- Steve Stouffer, currently senior vice president of beef margin management
- Group Vice President of International- James Young, currently group vice president of international
- Executive Vice President of Strategy and New Ventures- Hal Carper, currently group vice president of R&D, logistics and technical services
- Executive Vice President of Program Management– Russell Tooley, currently senior vice president of corporate and international human resources
“Separating our poultry and prepared foods businesses will give us sharper focus in two critical, expanding areas,” Smith said. “I’m excited that Noel White, a proven leader in our fresh meats business, is moving to Arkansas to run our poultry business. And I’m equally excited that Donnie King will devote his considerable talents to our growing value added foods business and creating an integrated sales and marketing organization to deepen our relationships with customers.”
Two new leadership positions will report to the president of prepared foods, customer and consumer solutions:
- President of Prepared Foods– Wes Morris, currently group vice president of consumer products
- President of Sales and Marketing and Chief Commercial Officer– Devin Cole, currently group vice president of foodservice
The following senior leadership positions will continue to report to the CEO:
- Executive Vice President and Chief Financial Officer- Dennis Leatherby
- Executive Vice President and General Counsel- David Van Bebber
- Executive Vice President and Chief Human Resources Officer- Ken Kimbro
- Executive Vice President of Corporate Affairs- Sara Lilygren
The new leadership positions are expected to be fully in place by the end of the company’s second fiscal quarter in March 2014.
In addition, Smith announced Jim Lochner’s decision to retire in September 2014 after a more than 30-year career at Tyson Foods and IBP inc. Lochner has served since 2009 as the company’s chief operating officer and overseen much of the turnaround during the last four years. He is relocating to the company’s fresh meats headquarters in Dakota Dunes, South Dakota, where he will support the fresh meats business. Following retirement, Lochner will serve the company in an advisory capacity through the end of 2017.
“This company and I personally cannot thank Jim Lochner enough for his huge contribution – which continues for several more years,” Smith said. “His retirement and these new leadership positions fulfill a long-planned, orderly succession involving Jim and the highly talented team he has helped groom over the past four years.”
Smith also announced the February 2014 retirement of his special assistant, Donald E. “Buddy” Wray. Wray served the company in various leadership roles until his retirement as president and COO in 2000, but in 2008 was called back by Don Tyson to provide strategic counsel.
“Buddy has invested more than 50 years of his life in Tyson Foods,” Smith said. “He has been a trusted advisor to me during a phenomenal period in our company’s history,” Smith said. “His wisdom and guidance helped us deliver outstanding results and his nearly six decades of experience have been a wonderful gift.”
To help manage the organizational transitions, Smith also announced the appointment of Russell Tooley as executive vice president of program management. Formerly a senior vice president of corporate and international human resources, Tooley will now report to the CEO.
“During this period of our company’s evolution, I want to be sure we devote the proper time and talent to our greatest growth engines. I’ve often said, ‘What got us here won’t get us there,’” Smith commented. “The fact that we already have much of the talent we need to continue our development into a global food business is proof that we have the strongest bench in the business, and I join them in looking forward to an awesome future.”
Source: Tyson Foods Inc.