SPRINGDALE, ARK. — Continued expenses related to COVID-19 and continued challenges in Tyson Foods Inc.’s Chicken business segment were offset by higher operating income and sales in the company’s Beef and Prepared Foods business segments for the second fiscal quarter ended April 3. Net income in the quarter totaled $476 million, equal to $1.30 per share on the common stock, up 27% from $376 million, or $1.03 per share, during the same period last year.

Overall operating income, led by the Beef segment, totaled $720 million on sales of $11.3 billion in the second quarter, which compared with $515 million on sales of $10.89 billion in 2020, with an operating margin of 6.4% versus 4.7% in the same period last year.

Dean Banks, president and chief executive officer, said the company is challenged by significant inflation across its supply chain that will likely negatively impact Tyson’s margin in the second half of the year. Meanwhile, company officials look forward to the Chicken segment’s recovery as the industry rebounds after the onset of the global pandemic more than a year ago. 

“We’re grateful for our team members’ continuing efforts and resilience, and for the collaboration and support we’ve received from our customers as we navigate these challenging times,” Mr. Banks said. “We delivered a very strong performance in a complex operating environment with continued success in retail and improvements in foodservice as the industry is recovering.”

Beef operating income increased to $445 million in the quarter, up sharply from $123 million in 2020. Adjusted operating margin was 11% in the second quarter of fiscal 2021, which compared with 3.1% the previous year. Beef sales totaled $4.05 billion for the quarter, up 1.7% from $3.98 billion in 2020.

“Average sales price increased in the second quarter and first six months of fiscal 2021 as demand for our beef products remained strong,” the company said in comments related to its beef business. “Operating income increased in the second quarter and first six months of fiscal 2021 due to strong demand as we continued to optimize revenues relative to live cattle supply, partially offset by production inefficiencies and direct incremental expenses related to COVID-19.”

Chicken segment sales, at $3.55 billion, topped the previous year’s quarter of $3.4 billion, while operating income in the unit fell to $6 million from $99 million a year ago. During a May 10 conference call, company officials said factors hindering chicken segment performance included decreased egg production and hatch rates resulting from a previous change in genetics in addition to labor shortage at its plants and Winter Storm Uri, which interrupted operations throughout much of the industry’s poultry production and processing regions. Officials added that demand so far this year exceeded the company’s expectations, forcing it to purchase more raw material on the open market this year than it had planned.

Operating income in the Pork segment totaled $67 million, down 28% from $93 million in the same period a year ago, reflecting production inefficiencies and expenses related to COVID-19. Meanwhile, sales in the segment increased to $1.48 billion from $1.27 billion. Sales volume dipped 0.5% in the quarter, which was attributed to fewer live hogs processed as a result of severe winter weather.

In the Prepared Foods segment, operating income increased 14% to $217 million from $191 million. Sales, meanwhile, moved up to $2.16 billion from $2.08 billion. Operating margin was 10% in the quarter, which compared with a margin of 9.2% a year ago. 

“Sales volume decreased during the second quarter and first six months of fiscal 2021 as growth in volume across the retail channel was offset by a reduction in the foodservice channel related to lower demand from the impact of COVID-19,” the company said of its Prepared Foods segment. “Additionally, sales volume decreased during the second quarter and first six months of fiscal 2021 due to lower production throughput partially associated with a challenging labor and supply environment and the impact of severe winter weather.”

The International/Other category sustained an operating loss of $15 million in the quarter, which compared with income of $9 million a year ago. Sales were $487 million, up from $465 million in the same period a year ago.

Looking ahead, Mr. Banks said there are reasons for optimism.

“Our long-term outlook is bright as global protein consumption continues to grow, and we expect our investments in capacity expansion, product innovation and technology to create sustainable shareholder value,” he said.

Tyson said it expects to invest between $1.3 billion and $1.5 billion on capacity expansion, infrastructure, animal welfare and operational improvements.

In terms of managing COVID-19, the company continues to cope with multiple challenges, which is expected to negatively impact its operating costs and volumes for the remainder of the year. Approximately 42,000 workers have been vaccinated across 100 Tyson facilities to date, according to the company.

“For fiscal 2021, we estimate that we will incur approximately $365 million of direct incremental expenses associated with the impact of COVID-19; however, some of these incremental expenses may become permanent over time,” Tyson said.