Tyson Foods' Sales and Profits Rise

US - Meat processing giant Tyson Foods has seen a seven per cent rise in operating profit over the last year rising from $1.286 billion to $1.375 billion.
calendar icon 20 November 2013
clock icon 7 minute read

The company’s net income also rose by nearly $200 million to £778 million from $583 million.

The seven per cent rise in profits was on the back of a four per cent rise in sales over the year from $33.055 billion to $34.374 billion.

Tyson has reported record adjusted EPS from continuing operations increasing by 15 per cent to $2.26 compared to $1.97 last year.

The company has record sales of $8.9 billion in the fourth quarter of the year, an increase of seven per cent over last year.

Operating income in the quarter increased by 18 per cent to $416 million.

During the fourth quarter, Tyson repurchased 9.9 million shares for $300 million.

The board has declared a 50 per cent increase on the quarterly dividend from $0.05 to $0.075 on shares of Class A common stock.

"We had a great fourth quarter, and 2013 was the best year in company history in terms of record sales and earnings per share," said Donnie Smith, Tyson's president and chief executive officer.

"The company achieved these results while buying back $550 million in stock, paying more than $100 million in dividends, continuing to build out operations in China and growing Tyson’s prepared foods business through acquisitions and by entering new product categories.

"A year ago we outlined Tyson’s expectations for growth. We said you should expect top line sales to grow around 3-4 per cent annually. In fiscal 2013, we grew sales by four per cent," Mr Smith said.

"This time last year, we projected earnings for fiscal 2013 would be roughly flat to the previous two years but would grow at a rate of at least 10 per cent a year in 2014 and beyond.

“By overcoming many challenges, we grew adjusted earnings from continuing operations by 15 per cent this year.

“Sales growth from value-added products was almost six per cent, against an aggressive goal of six to eight per cent growth per year.

“And finally, we set a goal of growing sales from international production by 12-16 per cent a year, and we beat that goal with 20 per cent growth.

"I'm proud of what we've accomplished, and with every success, we raise the bar higher. Although we've been successful, there is still so much potential," Mr Smith said.

"We have a great team that is focused and united. As a leader and as a shareholder, I'm excited about the future of Tyson Foods."

Chicken Sector

Sales volumes grew due to increased domestic and international production driven by stronger demand for Tyson’s chicken products.

The increase in average sales price in the fourth quarter and 12 months of fiscal 2013 was due to mix changes and price increases associated with higher input costs.

Since many of Tyson’s sales contracts are formula based or shorter-term in nature, Tyson said it was able to offset rising input costs through improved pricing and mix.

Operating income was positively impacted by increased average sales price and volume, improved live performance and operational execution, as well as improved performance in Tyson’s foreign-produced operations. These increases were partially offset by increased feed costs of approximately $30 million and $470 million for the fourth quarter and 12 months of fiscal 2013, respectively.

Beef Sector

For the fourth quarter of fiscal 2013, sales volume rose as Tyson increased production due to sufficient cattle supply and strong demand for Tyson’s beef products.

Sales volume decreased for the 12 months of fiscal 2013 due to less outside trim and tallow purchases.

Average sales price increased due to lower domestic availability of fed cattle supplies, which drove up livestock costs.

Operating income rose due to improved operational execution, less volatile live cattle markets and improved export markets.

Pork Sector

Sales volume decreased as a result of balancing Tyson’s supply with customer demand and reduced exports.

Demand for pork products improved, which drove up average sales price and livestock cost despite a slight increase in live hog supplies.

While reduced compared to the prior year, operating income remained strong in the 12 months of fiscal 2013 despite brief periods of imbalance in industry supply and customer demand.

Prepared Foods Sector

Sales volume increased as a result of improved demand for Tyson’s prepared products and incremental volumes from the purchase of two businesses in fiscal 2013.

Average sales price rose due to price increases associated with higher input costs. Operating income decreased, despite increases in sales volumes and average sales price, as the result of increased raw materials and additional costs incurred as the company invested in Tyson’s lunchmeat business and growth platforms.

Because many of Tyson’s sales contracts are formula based or shorter-term in nature, the company said it is able to offset rising input costs through pricing. However, there is a lag time for price increases to take effect.


In the 2014 financial year, Tyson said it expects overall domestic protein production (chicken, beef, pork and turkey) to increase approximately 1 per cent from fiscal 2013 levels.

Grain supplies are expected to increase in fiscal 2014, which should result in lower input costs.

In the chicken sector the company said it expects domestic chicken production to increase by three to four per cent in fiscal 2014 compared to fiscal 2013.

Based on current futures prices, the company expects lower feed costs in fiscal 2014 compared to fiscal 2013 of approximately $500 million.

Many of Tyson’s sales contracts are formula based or shorter-term in nature, which allows the company to adjust pricing when input costs fluctuate.

However, there may be a lag time for price changes to take effect. For fiscal 2014, we believe Tyson’s Chicken segment will be in or above its normalised range of 5.0 per cent-7.0 per cent.

In the beef sector Tyson expects to see a reduction of industry fed cattle supplies of two to three per cent in fiscal 2014 as compared to fiscal 2013.

For fiscal 2014, the company said its beef segment's profitability will be similar to fiscal 2013, but could be below its normalised range of 2.5 per cent-4.5 per cent.

In the pork sector the company expects industry hog supplies to increase between one and two per cent in fiscal 2014 and exports to improve compared to fiscal 2013. For fiscal 2014, we believe Tyson’s Pork segment will be in its normalised range of six per cent to eight per cent.

In Prepared Foods Tyson said it expects operational improvements and pricing to offset increased raw material costs.

Tyson’s Prepared Foods segment could be slightly below its normalised range of four per cent to six per cent for fiscal 2014.

The company expects fiscal 2014 sales to be approximately $36 billion as it continues to execute a strategy of accelerating growth in domestic value-added chicken sales, prepared food sales and international chicken production.

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