Tyson Foods reports Q4 and full 2021 results

United States
Published:  16 November, 2021
Credit: Bailey Alexander

The U.S.-headquartered meatpacker and hide processor has reported its fourth quarter and full 2021 fiscal year results, with adjusted operating income of US$4.3 billion for the full year, up 42% from 2020.

Tyson saw adjusted operating income of US$1.15 billion for the fourth quarter, up 26% from prior year. These positive results came despite approximately US$335 million of direct incremental expenses related to Covid-19 for the full 2021 fiscal year.

Covid-19 related expenses for the fourth quarter alone were US$65 million. The company said these direct incremental expenses primarily included team member costs associated with worker health and availability including direct costs for personal protection equipment, production facility sanitisation, Covid-19 testing and vaccinations, donations, product downgrades, rendered product and certain professional fees, partially offset by CARES Act credits.

Tyson anticipates that some of these direct incremental expenses will become permanent over time, and other indirect costs associated with Covid-19 are not reflected in these amounts, including costs associated with raw materials, distribution and transportation, plant underutilisation and reconfiguration, premiums paid to cattle producers and pricing discounts.

Beef

Sales volume for beef decreased 15.4% during the fourth quarter of fiscal 2021, or decreased 8.8% after removing the impact of an additional week in 2020, due to the impact associated with a challenging labour environment, the company says, partially offset by strong global demand. Sales volume increased 0.3% during fiscal 2021 as a whole, 2.4% without the impact of the aforementioned additional week in fiscal 2020.

Average sales price increased as input costs such as live cattle, labour, freight and transportation costs increased and demand for Tyson beef products remained strong. Operating income increased due to strong demand as the company reportedly continued to optimise revenues relative to live cattle supply, partially offset by production inefficiencies due to labour challenges.

Additionally, operating income in fiscal 2021 was impacted by a cattle supplier's misappropriation of company funds, Tyson says, which resulted in a US$55 million gain related to the recovery of cattle inventory as compared to a US$106 million loss recognised in fiscal 2020.

2022 outlook

For fiscal 2022, the United States Department of Agriculture (USDA) indicates domestic protein production (beef, pork, chicken and turkey) should increase slightly compared with fiscal 2021 levels.

Beginning in fiscal 2022, Tyson is launching a new productivity program, which is designed to drive a better, faster and more agile organisation. The company is budgeting for US$1 billion in productivity savings by the end of fiscal 2024 and US$300-400 million in fiscal 2022, relative to a fiscal 2021 cost baseline. Tyson forecasts sales to reach US$49-51 billion across the 2022 financial year.

For beef in particular, the USDA projects domestic production will decrease approximately 2% in fiscal 2022 as compared to fiscal 2021. Tyson anticipates another strong year with an adjusted operating margin between 9% to 11% in fiscal 2022. The company forecasts the first half of the fiscal year to be stronger than the second half, as a combination of higher utilisation and demand for cattle may result in a narrowing spread.