Despite the chicken feed cost crunch, Tyson Foods, Springdale, Arkansas, USA, managed to nearly double its fourth quarter profit to $185 million from $97 million a year earlier, even as the chicken and pork producer's sales dipped slightly to $8.37 billion from $8.4 billion.
"Our earnings for the fourth quarter and fiscal year indicate that Tyson Foods is rising above the noise of commodity markets to produce solid, more consistent results," said Donnie Smith, Tyson's president and chief executive officer. "It has taken us several years and a lot of work to get to this point, and although there is much more to be done, I believe we have reached a new level of sustainable performance."
"Current USDA data shows US chicken production will be down slightly in fiscal 2013," said Smith. " Due to the reduced crop supply, we expect higher grain costs in fiscal 2013 compared to fiscal 2012 of approximately $600 million. However, the capital investment and significant operational, mix and pricing improvements we have made in our chicken segment have better positioned us to adapt to rising grain prices. For fiscal 2013, we anticipate our Chicken segment will remain profitable, but could be below our normalized range of 5.0%-7.0%."
For fiscal year 2012, Tyson's net income declined to $583 million or $1.58 per share from $750 million or $1.97 per share in the previous year. Adjusted earnings per share rose to $1.91 from $1.89 last year. Analysts had expected the company to earn $1.78 per share. Sales for the year grew three percent to $33.28 billion from $32.27 billion in the prior year, but missed analysts' consensus estimate of $33.35 billion.
In the chicken segment, fourth quarter sales rose about six percent to $3.02 billion and average price grew nine percent, but sales volume slid four percent, reflecting domestic production cuts due to lower customer demand. Beef segment sales declined three percent to $3.43 billion amid a 13% decline in sales volume, reflecting reductions in live cattle processed and outside tallow purchases. Yet average price rose 12% due to price increases associated with increased livestock costs. Pork sales declined six percent to $1.32 billion. Average sales price decreased 12% due to increased domestic availability of pork products, which drove lower live hog costs. Volume rose five percent.
