Stronger domestic and export demand boost Tyson’s results

United States
Published:  13 February, 2017

American multinational Tyson Foods has reported record first-quarter profits, driven by a good performance in its beef and pork units.

The Arkansas based, U.S., multinational posted a first-quarter profit of US$593 million, up 38% year-on-year. The beef and pork units contributed to the overall results with operating income of US$299 million and US$247 million, respectively, in the first quarter, up from US$71 million and US$158 million in the corresponding period the previous year.

Record Operating income in the period was up 27% to US$982 million. The overall operating margin was at 10.7%, with the pork segment’s operating margin at 19.7%, and the beef segment at 8.5%. The Company posted record operating cash flows of over US$1.1 billion, and reported repurchased 8.1 million shares for US$520 million.

“The year is off to the best start in company history with record earnings, record operating income and record cash flows. Return on sales for each operating segment was in or above the normalised 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”, said Tom Hayes, President and CEO, Tyson Foods. “We’re on a path toward what we expect to be our fifth straight year of record results. Our path won’t be linear, but our team is focused on delivering long-term growth and creating shareholder value”, he added.

Sales volume in the beef unit is said to have increased due to improved availability of cattle supply and stronger domestic and export demand for its beef products. The average sales price decreased due to higher domestic availability of beef supplies and lower livestock cost, while the operating income increased “due to more favourable market conditions as we maximised our revenues relative to the decline in live fed cattle costs, partially offset by higher operating costs”, said a company statement.

Tyson expects industry fed cattle supplies to increase approximately 3-4% in fiscal 2017 compared with fiscal 2016, and the beef segment's operating margin to be around 5%.

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