For the first nine months of its fiscal year 2020, Tyson has posted GAAP earnings per share (EPS) of US$3.96, down 12% from the prior year, and adjusted EPS of US$3.83 (-10%). GAAP operating income totalled US$2,102 million in the period and total company GAAP operating margin was 6.6%. For the third quarter, GAAP EPS was US$1.44, down 22% compared with the same quarter in the prior year, and GAAP operating income stood at US$775 million. Total company GAAP operating margin was 7.7%, with a liquidity of US$3.1 billion at June 27, 2020. According to Tyson, the results were negatively impacted by approximately US$340 million of direct incremental expenses related to Covid-19 in the quarter.
“Without a doubt, our third fiscal quarter was one of the most volatile and uncertain periods I’ve seen during my time in the industry”, said Noel White, CEO, Tyson Foods. “However, our commitment to team member health and safety and investments in operations and portfolio strategy effectively positioned us to weather unprecedented Covid-19 marketplace volatility while allowing us to support our farmers, ranchers and producers and meet our customers’ needs”, he said, adding that within each of Tyson’s segments the company “absorbed higher-than-normal operating costs” related to Covid-19.
In the beef segment, Tyson said sales volume decreased both for the third quarter and the first nine months of fiscal 2020, primarily due to lower production throughput associated with the impact of Covid-19 in the third quarter of fiscal 2020 and a reduction in live cattle harvest capacity as a result of a fire that caused the temporary closure of a production facility for the majority of the first quarter of fiscal 2020. Average sales price increased as beef demand remained strong amid supply disruptions related to the impact of Covid-19. Operating income in the third quarter was impacted by approximately US$45 million of net derivative gains and US$15 million of net insurance proceeds from a production facility fire.
Tyson expects worldwide demand to continue to increase, and the multiple challenges it faces related to the pandemic are anticipated to increase the company’s operating costs and negatively impact its volumes for the remainder of fiscal 2020 and into fiscal 2021.
Effective October 3, 2020, Dean Banks is to succeed Noel White as CEO, while maintaining the role of President. Prior to joining Tyson Foods, Banks was a Project Lead and on the Leadership Team at X (formerly Google [x]), an Alphabet company, where he remains an advisor. Previously, he was Managing Partner of SEED Ventures, a group investing in and developing early stage healthcare technologies.