Higher chicken and beef sales and operational improvements contributed to a solid first quarter for Tyson Foods, Inc.
For the quarter ended Dec. 28, 2013, net income attributable to Tyson Foods increased 47% to $254 million, equal to 76c per share on the common stock, up from $173 million, or 50c per share, during the same quarter of the previous year.
“I’m very pleased with our strong first-quarter results, and I’m confident in my expectations for the full year,” said Donnie Smith, president and chief executive officer. “We’re growing sales and earnings and executing our strategy — including making our third prepared foods acquisition in less than a year — while reinvesting in our existing businesses and buying back shares.”
Sales for the quarter rose 4.7% to $8,761 million from $8,366 million during the prior-year period.
Operating income for the chicken segment soared to $225 million, up 51% from $111 million last year, driven by increased sales volume, operational improvements and lower feed ingredient costs that offset losses in international operations and a decreased average sales price. Sales for the segment increased 2% to $2,981 million from $2,920 million during the prior-year period.
For the beef segment, demand drove higher sales volumes to lift operating income to $58 million, up 26% from $46 million last year, which also reflected improved operational execution, less volatility in live cattle markets and improved export markets and partially offset increased operating costs. Sales of beef climbed 7% to $3,734 million from $3,485 million in the first quarter of last year.
Operating income for the pork segment slipped 3.2% to $121 million from $125 million on decreased sales volumes as a result of supply-and-demand imbalance from increased consumer demand and reduced exports. Average sales price increased with mix changes and lower total hog supplies, nudging sales up 4.5% to $1,424 million from $1,363 million.
Prepared foods income dropped 52% to $16 million from $33 million, despite increases in sales volumes and average sales prices, as Tyson incurred higher raw material and other input costs, as well as costs associated with investments in its lunchmeat business and growth platforms. Improved demand and incremental volumes from acquisitions drove sales up 7.8% to $907 million from $841 million last year.
Looking ahead, the company expects overall domestic protein production to increase approximately 1% from year-ago levels on lower input costs from increased grain supplies.
“We’re in a position any company wants to be in, which is being able to make deliberate, long-term decisions to create shareholder value,” Mr. Smith said. “But we’re maintaining our sense of urgency, our flexibility and our opportunistic mindset. We’re generating momentum that will take us into 2015, 2016 and beyond.”
