Tyson reports record start to 2018
Feb. 8, 2018
by MEAT+POULTRY Staff
A record Q1 includes bonuses to employees thanks to the new tax laws.
SPRINGDALE, Ark. – Recent tax law changes benefitted many corporations and Tyson Foods Inc. was not an exception. Global demand for protein and a forecast for continued growth were also integral to a record first quarter for the meat and poultry giant.
The company reported record performance for its first quarter of fiscal 2018, ended Dec. 30, 2017, with sales of $10.23 billion compared to $9.18 billion during the same period last year. The company’s new year was highlighted by a quarterly profit of $1.63 billion, or $4.40 per share of common stock, a 177 percent increase versus $594 million, or $1.59 per share last year. Most analysts were expecting revenues for the quarter to come in at approximately $9.87 billion. Leading the company’s performance was its Prepared Foods business, with operating income of $273 million and 11.9 percent profit.
“At Tyson Foods, we’re creating a modern food company focused on protein,” said Tom Hayes, Tyson’s president and CEO. “Building on our momentum from a record year in fiscal ’17, we’re off to a strong start in fiscal ’18. We delivered record adjusted EPS and our second-strongest quarter of operating income in Q1, with operating cash flows of more than $1.1 billion,” he said.
The new tax laws served as a shot in the arm as Tyson recorded a bottom-line benefit of approximately $790 million. Hayes informed employees that $300 million of the tax savings would be shared with them as well as on capital projects. According to Hayes, the company is providing a one-time bonus of $1,000 to eligible full-time workers who don’t already receive bonuses and $500 to part-time employees who are eligible.
“These team members are the backbone of our business and can expect to hear more details from their leadership soon,” Hayes said.
Sales in the Prepared Foods segment topped $2.29 billion, an 11.6 percent increase over sales of $1.89 billion in the same quarter in 2017.
Meanwhile the company’s Chicken segment unit generated sales of $2.99 billion, an increase of 7.3 percent over the previous year’s first quarter. Operating income topped $272 million with an operating margin of 9.1 percent, down 0.6 percent from the previous year. Sales volume increased 7.3 percent thanks to demand for chicken products and additional volume from Tyson’s AdvancePierre acquisition in 2017.
Tyson’s Beef business reported sales of $3.89 billion for the quarter more than $350 million over the $3.528 billion posted during the same period last year. Sales increases were attributed to an increased supply of cattle, growth in exports and higher demand overall for beef.
The company’s Pork business reported sales of $1.283 billion for the quarter, with lower operating income, at $151 million in 2018 versus $247 million in 2017, with operating margins of 11.8 percent compared to 19.7 percent in 2017. Labor and freight costs were the cause of some of the headwinds in the segment as the company maintained positive margins despite higher livestock costs and increasing sales prices during a period that resulted in margin compression.
Looking forward, Tyson expects US production of protein to increase by 3 percent based on US Dept. of Agriculture data, with growing demand from exporting partners likely to account for most of that increase.
“As we look to the long-term, we’re confident in our ability to continue growing the business,” Hayes said. “Demand for protein continues to rise, and we’re well-positioned to take advantage of that opportunity — and to fulfill our aspiration of sustainably feeding the world.”