Strong fourth quarter lifts Tyson full-year profit
November 18, 2013
by Eric Schroeder
SPRINGDALE, Ark. – Jim Lochner, COO of Tyson Foods, will retire in September 2014 after spending more than 30 years with the company, the company announced Nov. 18.
Lochner has served as Tyson's COO since 2009. He is moving to the support the company's fresh meat business in Dakota Dunes, SD. Lochner will serve in an advisory capacity through 2017 following his retirement.
“This company and I personally cannot thank Jim Lochner enough for his huge contribution – which continues for several more years,” said Donnie Smith, president and CEO of Tyson Foods. “His retirement and these new leadership positions fulfill a long-planned, orderly succession involving Jim and the highly talented team he has helped groom over the past four years.”
As COO, Lochner's responsibilities include oversight of Tyson's poultry and fresh meat production operations, as well as food processing, international divisions and renewable products. He also leads divisions that support the company’s business units through transportation, information services, product development, and environmental, health and safety services.
Lochner has held numerous positions within the company, including senior group vice president for the Fresh Meats division, and senior group vice president over Margin Optimization, Purchasing and Logistics. He joined the company in 2001 as part of Tyson's acquisition of meat processor IBP, Inc., where Lochner was president and COO of IBP Fresh Meats. Lochner had joined IBP in 1983.
Lochner has bachelor’s and master’s degrees in meat and animal science from the Univ. of Wisconsin–Madison. He has worked for Oscar Mayer & Co. and as a faculty member of the Department of Animal Sciences at the Univ. of Wisconsin.
Also retiring in 2014 is Donald “Buddy” Wray, special assistant to the president and CEO. Wray is credited with helping the company widen its offerings from fresh chicken to include prepared foods, such as chicken nuggets and patties, in the 1970s and 1980s.
After initially retiring in 2000 from his role as COO, Wray returned to the company in 2009 as executive vice president and special assistant to the president and CEO, Donnie Smith. Wray also served on the company's board of directors from 1994 to 2003.
Wray is a US Army veteran and a graduate of the Univ. of Arkansas. He joined Tyson Foods in 1961 as a service technician — a liaison between the company and contract family farmers – and progressed into management roles at plants in Rogers and Springdale, Ark.
Wray currently serves on the board of the Jones Center for Families, the Jones Trust, the Endeavor Foundation and the Care Foundation, all of northwest Arkansas. He is also on the National Advisory Board for the American Studies Institute at Harding Univ. and is a board member of Arvest Bank, Springdale, Ark.
The announcement comes as Tyson touts a “great” fourth quarter that propelled Tyson Foods to record sales and earnings per share in fiscal 2013, according to Smith. Net income in the fourth quarter ended Sept. 28 was $261 million, equal to 70c per share on the common stock, up 41 percent from $185 million, or 51 cents per share, in the same quarter a year ago. For the full year, net income was $778 million, or $2.12 per share, up 33 percent from $583 million, or $1.58 per share, in fiscal 2012.
Net sales during the fourth quarter of fiscal 2013 increased 7 percent to $8,894 million from $8,315 million. For the full year, sales were up 4 percent, at $34,374 million.
“We had a great fourth quarter, and 2013 was the best year in company history in terms of record sales and earnings per share,” Smith said. “The company achieved these results while buying back $550 million in stock, paying more than $100 million in dividends, continuing to build our operations in China and growing our prepared foods business through acquisitions and by entering new product categories.
“A year ago we outlined our expectations for growth. We said you should expect top-line sales to grow around 3 percent to 4 percent annually. In fiscal 2013, we grew sales by 4 percent. 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 percent a year in 2014 and beyond. By overcoming many challenges, we grew adjusted earnings from continuing operations by 15 percent this year. Sales growth from value-added products was almost 6 percent, against an aggressive goal of 6 percent to 8 percent growth per year. And finally, we set a goal of growing sales from international production by 12 percent to 16 percent a year, and we beat that goal with 20 percent growth.”
Smith said Tyson plans to “raise the bar higher.”
“Although we’ve been successful, there is still so much potential,” he 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.”
Operating income within the Chicken segment during fiscal 2013 totaled $646 million, up 33 percent from fiscal 2012. Sales totaled $12,296 million, up 8 percent from $11,368 million. Tyson said sales volumes grew behind increased domestic and international production driven by stronger demand for the company’s chicken products.
Beef segment operating income totaled $296 million in fiscal 2013, up 36 percent from $218 million a year ago. Sales also increased, moving up 5 percent to $14,400 million from $13,755 million. Sales volume for the full year decreased due to less outside trim and tallow purchases, Tyson said.
Operating income within the Pork segment fell to $332 million, down 20 percent from $417 million a year ago. Sales eased 2 percent to $5,408 million from $5,510 million. Tyson said sales volume was held back as the company tried to balance supply with customer demand and reduced exports.
In the Prepared Foods segment, operating income was $101 million, down 44 percent from $181 million in fiscal 2012. Sales were virtually unchanged at $3,322 million, which compared with $3,237 million. The company attributed the decline in operating income to higher raw materials and additional costs incurred as it invested in its lunchmeat business and growth platforms.
In addition to its financial results, Tyson announced the creation of several new leadership positions to support future growth in its domestic and international protein and prepared foods businesses, including:
• Donnie King, currently senior group vice-president of poultry and prepared foods, was named president of prepared foods, customer and consumer solutions.
• Noel White, currently senior group vice-president of fresh meats, was named president of poultry.
• Steve Stouffer, currently senior vice-president of beef margin management, was named president of fresh meats.
“Separating our poultry and prepared foods businesses will give us sharper focus in two critical, expanding areas,” Smith said. “I’m excited that Noel White, a proven leader in our fresh meats business, is moving to Arkansas to run our poultry business. And I’m equally excited that Donnie King will devote his considerable talents to our growing value added foods business and creating an integrated sales and marketing organization to deepen our relationships with customers.”
Additionally, two new leadership positions will report to the president of prepared foods, customer and consumer solutions. Wes Morris, currently group vice president of consumer products, was named president of prepared foods, and Devin Cole, currently group vice president of food service, was named president of sales and marketing and chief commercial officer.