SPRINGDALE, ARK. — A strong performance in the protein market helped deliver a 42% increase in earnings at Tyson Foods Inc. in the third quarter.
Net income in the third quarter ended July 3 totaled $749 million, equal to $2.05 per share on the common stock, up from $526 million, or $1.44 per share, in the same period a year ago. Adjusted earnings per share were $2.70, up 93% from the previous year.
Total sales for the period were $12.48 billion, up 25% from $10.02 billion a year ago.
Tyson raised its guidance for fiscal 2021 revenues to approximately $46 billion to $47 billion.
“We delivered a strong performance in a strong protein market,” said Donnie King, president and chief executive officer. “With trusted brands that met strong consumer demand, we have delivered 12 consecutive quarters of share gains in core business lines at retail.
“Our foodservice volume improved as the restaurant industry began to reopen and recover. Our beef business increased production to meet strong US and international demand for higher-quality products. And we continued to build financial strength, reducing our debt and investing in future growth by laying out plans to expand our business, both to address capacity constraints and meet growing demand.”
On a segment basis, Tyson’s Beef business reported higher sales volume due to strong global demand and reduced production inefficiencies associated with COVID-19.
In the Pork business, operating income declined in the third quarter and first nine months of fiscal 2021 on lower hog supplies relative to industry capacity as well as production inefficiencies related to COVID-19 and a challenging labor environment. These factors were partially offset by a reduction in direct incremental expenses related to COVID-19 in the third quarter of fiscal 2021 as compared to fiscal 2020, the company said.
Higher demand in the foodservice channel and reduced production inefficiencies lifted sales volume in the company’s Chicken business during the third quarter. Average sales price increased in the third quarter and first nine months of the fiscal year due to favorable sales mix and inflationary market conditions.
Sales volume in Tyson’s Prepared Foods segment increased during the third quarter primarily on increased demand in the foodservice channel and sustained retail demand as well as reduced production throughput disruptions associated with COVID-19 compared to the third quarter of fiscal 2020, the company said.
In other highlights of the company’s earnings, Mr. King emphasized that employee safety remains a top priority and the company strives to be the most desirable place to work. Thus, the company is requiring its employees to be vaccinated. Nearly 50% of the company’s workforce is vaccinated so far, according to Tyson.
The company incurred direct incremental expenses of approximately $55 million and $270 million for the third quarter and first nine months of fiscal 2021, respectively.
“These direct incremental expenses primarily included team member costs associated with worker health and availability, including direct costs for personal protection equipment, production facility sanitization, COVID-19 testing, donations, product downgrades, rendered product and certain professional fees, partially offset by CARES Act credits,” the company said. “Other indirect costs not reflected in this amount, including costs associated with raw materials, distribution and transportation, plant underutilization and reconfiguration, premiums paid to cattle producers and pricing discounts.”