SPRINGDALE, ARK. — Tyson Foods is doubling down on its core nine product lines, which include Tyson, Jimmy Dean, Hillshire Farm, Ball Park, State Fair and Aidells brands. Ongoing efforts to invest in and grow these brands resulted in a 4% increase in sales volume in the recent four-week period, said Donnie Smith, president and chief executive officer of Tyson Foods.
|Donnie Smith, president and c.e.o. of Tyson|
“The Core 9 product lines represent our strongest brands, greatest pricing power and best category growth opportunities and are major contributors to volume and profitability in the retail channel,” Mr. Smith said.
For the first quarter ended Jan. 2, net income attributable to Tyson was $461 million, equal to $1.18 per share on the common stock, which was up 49% from income of $309 million, or 77c per share, for the prior-year period. Sales declined 15% to $9,152 million from year-ago sales of $10,817 million.
The company reported record operating income of $776 million, which was up 38% from the same period of the year before.
“Fiscal 2016 is off to a very strong start in what we expect to be another record year,” Mr. Smith said. “Solid execution across the entire team resulted in record earnings, record operating income, record margins and record cash flows. We captured $121 million in total synergies for the quarter, with $61 million incremental to fiscal first quarter 2015.”
Based on strong first-quarter results, Tyson has raised its fiscal earnings guidance to $3.85 to $3.95 per share. However, executives now expect sales of approximately $37 billion, down from the previous estimate of $41 billion, due to declines in beef, pork and feed prices.
“We have a consumer-relevant portfolio packed with advantaged brands in advantaged categories, we have a superior supply chain, and we have a high-performing team focused on execution,” Mr. Smith said. “I’m really excited about what’s ahead.”
During the first quarter, Tyson’s Chicken business posted operating income of $358 million, an increase of 2% over the prior year, driven by improved operational execution and lower feed ingredient costs. Sales were $2,636 million, down 5.2% from the comparable quarter, reflecting a decrease in sales volume as a result of optimizing mix and Tyson’s buy-versus-grow strategy, which was partially offset by an increase in rendered product sales.
Beef operating income was $71 million for the quarter, which compared with a loss of $6 million the year before. The increase was driven by more favorable market conditions associated with an increase in supply, which lowered fed cattle costs. Sales in the Beef segment declined 18% to $3,614 million, as a result of a reduction in live cattle processed primarily due to the closing of Tyson’s plant in Denison, Iowa, in the fourth quarter.
Operating income for the Pork segment advanced 30% to $158 million, as the company maximized its revenues relative to live hog markets and as a result of better plant utilization associated with higher volumes, Tyson said. Sales slid 21% to $1,213 million, reflecting a decrease in sales volume following Tyson’s divestiture of its Heinold Hog Markets business in the first quarter of the prior year. Tyson said sales volume grew 5.5% excluding the impact of the divestiture, driven by stronger demand for pork products.The Prepared Foods segment posted operating income of $207 million, up 192% from the year before, driven by mix changes and lower input costs, as well as the benefit of $95 million in synergies associated with the integration of Hillshire Brands. Sales fell 11% to $1,896 million, as a result of a change in sales mix and the negative impact of avian influenza on Tyson’s turkey operations.