SPRINGDALE, ARK. – For the first quarter ended Jan. 1, 2022, Tyson Foods Inc. reported positive results despite the impact of ongoing inflation as high as 30% that saw increases in the company’s cost of goods of 18% as well as higher input costs for grain, live cattle and hogs and continued challenges related to labor and shipping costs.
Adjusted net income for the fiscal first quarter was $1.12 billion, a 140% increase from $467 million, reported in Q1 of fiscal 2021, or adjusted earnings per share of $2.87 per share versus $1.94 per share the previous year. Operating income more than doubled from $705 million for the first quarter of 2021 to $1.45 billion in fiscal 2022.
Sales for the quarter were $12.93 billion versus $10.46 billion during the same period in 2021, an increase of nearly 24%.
Quarterly sales growth in the Beef segment and increased overall volume that was led by the Chicken segment, contributed to what the company projects will be an operating margin of between 5% and 7% by about April 2022.
Growing beef demand supported increasing prices that averaged 31.7% with sales of $5 billion for the quarter compared to 3.99 billion during last year’s first fiscal quarter. Volume change was 6.2%.
“Sales volume decreased due to the impacts associated with a challenging labor environment and increased supply chain constraints, partially offset by strong global demand,” said Tyson about its Beef sector.
Chicken segment sales topped $3.89 billion in the quarter compared to $2.83 billion the previous year with prices increasing 19.9%. Volume increased 3.6%, due mostly to increased live production and positive demand.
“Operating income increased due to increased sales volume and higher average sales prices, partially offset by the impacts of inflationary market conditions including $185 million of higher feed ingredient costs,” according to the company.
Pork segment volume ticked up marginally (0.2%) with challenges related to the labor market offset strong demand for exports. Sales for the quarter were $1.63 billion compared to $1.44 billion last year and average price increased by 12.8%.
A decline in sales volume in the Prepared Food segment was attributed to the divestiture of Tyson’s pet treats business to General Mills in the fiscal Q4 of 2021 in addition to challenges related to labor and supplies.
“Operating income decreased due to the impacts of inflationary market conditions, including $215 million of increased raw materials and other input costs, increased supply chain costs and a challenging labor environment, partially offset by favorable pricing,” Tyson said.
To address the challenges of labor and productivity, Tyson said it is investing $1.3 billion in automation in the next three years as part of an overall strategy to realize recurring savings of $1 billion by fiscal 2024. The company expects to deliver savings between $300 and $400 million in fiscal 2022.
“We’re pleased with the results of the first quarter and of the steps that we are taking to improve productivity,” said Donnie King, president and chief executive officer of Tyson. “Our performance reflects the resilience of our multi-protein portfolio even with continued volatility in the marketplace.”