Each of Tyson Foods' business units contributed positively during the third quarter.

SPRINGDALE, ARK. – Strong contributions from each of its business units drove earnings and sales for Tyson Foods, Inc., during the third quarter of fiscal 2017, ended July 1. The positive results prompted management to revise its 2017 guidance upwards and forecast a positive performance in fiscal 2018.

Thomas Hayes, president and c.e.o. of Tyson Foods

“Q3 was our second-best quarter in company history on an adjusted e.p.s. basis, as we close in on another record year,” said Thomas P. Hayes, president and chief executive officer, during a conference call to discuss the results on Aug. 7. “All four segments achieved adjusted operating margins in or above their normalized ranges, and total net sales grew 4.8% versus Q3 last year, with every segment delivering volume growth as we continue to stay focused on delivering growth for customers by satisfying consumers' appetites for protein and fresh foods.”

Net income for the quarter totaled $447 million, equal to $1.24 per share on the common stock, down slightly from the previous year when the company earned $484 million, equal to $1.29 per share.

Sales for the quarter rose to $9,850 million from $9,403 million the previous year.

Dennis Leatherby, c.f.o. of Tyson Foods

“Our strong performance and record results for the first three quarters of fiscal '17 gives us confidence to narrow our adjusted annual e.p.s. guidance to a range of $4.95 to $5.05,” said Dennis Leatherby, chief financial officer. “This range excludes the impact of AdvancePierre, which we expect to be a few cents accretive in fiscal '17 on an adjusted basis. This new e.p.s. range is approximately 13% to 15% over our record fiscal '16 adjusted e.p.s. and represents a 5-year compounded annual growth rate of approximately 20%.”

The company’s Chicken business unit generated an adjusted operating income of $298 million with a 10.4% operating margin.

“Value-added chicken volume was up nearly 4% on the back of new product innovations and increased consumer demand for fully cooked Tyson-branded chicken,” Mr. Hayes said. “Higher prices for chicken haven't dampened consumer demand, and per capita consumption is projected to reach a record high this year.”

Tyson's Chicken business unit generated an adjusted operating income of $298 million.

In Prepared Foods, operating income was $195 million during the quarter, and operating margin was 10%. The company said strong innovation drove the business’ performance during the quarter.

“Our protein-packed brands resonate with consumers,” Mr. Hayes said. “And at retail, this is evident when you look at how Tyson aligns with the retail category growth. Growth areas are at the perimeter and, as consumers are demanding high-quality, fresh and prepared foods. Tyson is strong in refrigerated meats, where we're growing 7.8%; and fresh meats, where we're up 10.9%. We're bringing our food service experience and expertise to help our customers grow their prepared foods offerings in the deli, and shipments are up 5% year-over-year.”

The company’s Beef business, which has been a laggard for several years due to market conditions, performed well during the quarter, generating $147 million in operating income with an operating margin of 3.7%

“The big news for the beef industry this summer was that China reopened to U.S. beef imports, and we're proud to say that Tyson Foods was the first to arrive in China with U.S. beef,” Mr. Hayes said. “While shipments to this part (of the world) are very small, we're optimistic. Chinese consumers prefer high-value cuts, and we think they'll appreciate this pure quality of U.S. beef. (It’s) too soon to know yet what this could mean for exports, but we believe there's great potential in this. U.S. beef export demand was up 20% year-over-year in Q3.

Tyson Foods was the first to arrive in China with U.S. beef, Mr. Hayes said. 

“With ample supplies of cattle, we see very good conditions for our Beef business as far out as 2020 as we enter the early stages of a multiyear expansion cycle. Absent a shock to the system, such as a drought or an import ban, our Beef business is well positioned for profitable, long-term growth.”

Exports were also a key to the company’s Pork business, which produced $136 million in operating with a 10.3% operating margin. Year-over-year, U.S. pork exports were up 10% during the quarter.

“Our operations performed very well as we've maximized revenue and mix,” Mr. Hayes said. “There's been tremendous food service demand for bacon, which was a primary driver of the increased cutout. While performance could moderate from Q3 levels as global competition increases and labor markets tighten, the Pork segment is expected to perform well in Q4 despite pressure from competing proteins. “

Looking ahead to fiscal 2018, Mr. Hayes said management is expecting similar results from each of its business units.

Tyson's Pork business produced $136 million in operating.

“2017 has been a great year for the Beef segment,” he said. “And with ample cattle supplies and strong export demand, 2018 results should be similar to this year. The Pork segment should benefit from very strong export markets as well. And while there will be additional capacity coming on-line, it's needed to process the increased hog supply predicted by the U.S.D.A.

“In 2018, the Pork segment might not reach the likes of returns of 2017, but it should remain well above its normalized range. The Chicken segment should benefit from our move to ‘no antibiotics ever’ and expanded capacity in value-added products, in addition to brand renovation of the base and continued new product innovation.”

In fiscal 2018, the company expects to grow sales in dollars and volume and to grow earnings per share in the high single digits.