Tyson Foods Posts Record First Quarter Income

Feb 6, 2017

The folks based out of Springdale have been selling the meats. Talk Business & Politics reports Tyson Foods on Monday announced record fiscal first quarter net income of $594 million, up almost 29% compared to the same period in the previous fiscal quarter thanks to big gains in the beef and pork segments.

Check out Marketplace Morning Report's story on Tyson and the impact of NAFTA.

Earnings per share of $1.59 far outpaced analysts’ consensus estimate of $1.26. Total revenue for the quarter was $9.182 billion, better than the $9.152 billion in the same quarter of 2016 and better than the consensus estimate of $9.05 billion.

“The year is off to the best start in company history with record earnings, record operating income and record cash flows,” Tom Hayes, Tyson Foods president and CEO said in the earnings statement. “Return on sales for each operating segment was in or above the normalized range. The tremendous returns generated in the Beef and Pork segments are providing fuel for growth in our value-added Chicken and Prepared Foods segments.”

Hayes said the company is on track for a fifth straight year of record earnings. To that point, the company raised fiscal year 2017 earnings guidance from a $4.70-$4.85 range to $4.90-$5.05.

Operating income in the chicken segment during the quarter was $263 million, down from $358 million in the same quarter of 2016. Segment sales reached $2.706 billion, up from $2.636 billion.

“Operating income decreased due to increased marketing, advertising and promotion spend and higher operating costs which included $23 million of compensation and benefit integration expense. Feed costs decreased $20 million during the first quarter of fiscal 2017,” the company noted.

Beef segment operating income totaled $299 million, more than quadrupling the $71 million in the same quarter of 2016. Segment sales totaled $3.528 billion, below the $3.614 billion in the comparable quarter.

“Average sales price decreased due to higher domestic availability of beef supplies and lower livestock cost. Operating income increased due to more favorable market conditions as we maximized our revenues relative to the decline in live fed cattle costs, partially offset by higher operating costs,” company officials said of the segment.

Operating income in the pork segment was $247 million, up from $158 million in the same quarter of 2016. Segment sales totaled $1.252 billion, just ahead of the $1.213 billion in the same quarter of 2016. The company cited “strong demand for our pork products and increased exports” as reasons for the operating income gain.

Operating income in the prepared foods segment totaled $190 million, down from $207 million in the same quarter of 2016. Segment sales reached $1.895 billion, just below the $1.896 billion in the same quarter of 2016.

“Operating income decreased due to higher operating costs at some of our facilities, increased marketing, advertising and promotion spend and $22 million of compensation and benefit integration expense,” the company said of the prepared foods segment, which includes much of the business and brands acquired in the Hillshire Brands deal.

Tyson Foods’ shares (NYSE: TSN) closed Feb. 3 at $65.39, up 21 cents. During the past 52 weeks the share price has ranged from a $77.05 high to a $55.72 low.

Talk Business & Politics will update this story later today.