Tyson Foods delivers earnings growth in first six months, reaffirms guidance for another record year

Tyson Foods Inc. reported the following results for the second quarter and first six months of the fiscal year. Sales for Q2 were $9,773 billion, an increase from last year’s results of $9.083. Sales for the first half of the fiscal year are $20.002 billion, up from $18.265 billion. Adjusted operating income for the quarter was $694 million.

"We are continuing to grow our business as we create a modern food company focused on protein,” said Tom Hayes, president and chief executive officer of Tyson Foods. “Sales, volume, adjusted operating income and adjusted EPS all increased in the fiscal second quarter vs. the same period last year. Up against challenging conditions, we delivered solid results in all four of our segments.

“We’ve built a strong foundation of sustainable growth that positions us well for the second half of the fiscal year and beyond. We’re outpacing the food and beverage industry today - and looking ahead, we'll keep challenging the status quo and drive growth across our iconic brands.”

Summary of Segment Results

Beef - Sales volume increased for the six months and second quarter of fiscal 2018 due to improved availability of cattle supply, stronger demand for our beef products and increased exports. Average sales price increased for the six months and second quarter of fiscal 2018 as demand for beef products and strong exports outpaced the increase in live cattle supplies. Operating income for the six months and second quarter of fiscal 2018 remained strong, although below prior year's record results, as Tyson continued to maximize revenues relative to the higher live fed cattle costs, partially offset by increased labor and freight costs and one-time cash bonus to frontline employees of $27 million incurred in the second quarter of fiscal 2018.
Pork - Sales volume decreased for the six months and second quarter of fiscal 2018 as a result of balancing supply with customer demand during a period of margin compression. Average sales price increased for the six months of fiscal 2018 due to price increases in the first quarter of fiscal 2018 associated with higher livestock costs. In the second quarter of fiscal 2018, average sales price decreased as livestock costs fell. While reduced compared to the prior year record results, operating income for the six months and second quarter of fiscal 2018 remained strong as Tyson maximized revenues relative to the live hog markets due to operational and mix performance, which were partially offset by margin compression, higher labor and freight costs and one-time cash bonus to frontline employees of $12 million incurred in the second quarter of fiscal 2018.
Chicken - Sales volume was up for the six months and second quarter of fiscal 2018 due to strong demand for chicken products along with the incremental volume from the AdvancePierre acquisition. Average sales price increased for the six months and second quarter of fiscal 2018 due to sales mix changes. Operating income remained strong for the six months and second quarter of fiscal 2018 as Tyson benefited from $37 million and $23 million, respectively, of Financial Fitness Program cost savings, in addition to positive impacts from incremental AdvancePierre results and slightly lower feed costs, partially offset by increased labor, freight and growout expenses and one-time cash bonus to frontline employees of $51 million incurred in the second quarter of fiscal 2018.
Prepared Foods - Sales volume increased for the six months and second quarter of fiscal 2018 primarily from incremental volume from the AdvancePierre acquisition. Average sales price increased for the six months and second quarter from higher input costs of $90 million and $45 million, respectively, and product mix which was positively impacted by the acquisition of AdvancePierre. Operating income increased for the six months and second quarter of fiscal 2018 due to $62 million and $38 million, respectively, of Financial Fitness Program cost savings, in addition to positive impacts from improved mix and incremental AdvancePierre results, partially offset by higher input and freight costs and one-time cash bonus to frontline employees of $19 million incurred in the second quarter of fiscal 2018. Additionally, operating income was impacted in the second quarter of fiscal 2018 by a $75 million impairment related to the divestiture of non-protein business and was impacted in the second quarter of fiscal 2017 by a $52 million impairment of our San Diego Prepared Foods operation.

Source: Tyson Foods Inc.

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