SPRINGDALE, ARK. – A goal of Donnie King’s when he took over as president and chief executive officer of Tyson Foods Inc. less than a year ago was to improve the performance of the company’s Chicken business unit. Based on Tyson Foods’ second-quarter results, he’s making progress.
“Chicken remained a bright spot, where volume was up 2.1% through the first half compared to the same period last year,” King said during a May 9 conference call to discuss quarterly results. “This improvement was driven by solid fundamental demand as well as operational improvements. There is much more work to be done as we focus on filling our existing capacity. We are pulling multiple levers to drive sequential improvement in our performance. And as a result, I’m confident that we will see continued volume performance in the second half.”
King said the company realized market share increases in product categories that included bacon, hot dogs and snacking.
“We also continue to see recovery in the foodservice channel with our relative strength in QSRs and K-12, supporting continued share gains in branded value-added chicken,” he said. Overall, consumer demand for protein has remained strong, and we are taking deliberate actions by segment to improve our volumes to better meet customer needs, including investing in new capacity, brands, product innovation and our team member experience.”
While Beef segment volume declined over the first half of 2022, quarterly increases resulted from higher carcass weights.
“We expect continued volume improvements for the remainder of our fiscal year ‘22 as new team member recruitment strategies support an improved labor position and higher throughput,” King said.
He added that specialty products such as fat and tallow from the Beef unit are underpinning profitability.
“We’re able to take a lot of that product, and with the price of diesel and fuels, we’re able to … get some really great value out of those products, and that’s providing some tailwinds for us in our Beef business,” he said.
Stewart F. Glendinning, chief financial officer said volume in the Chicken segment was realized due to operational improvements and continued consumer demand. This trend is expected to continue in the back half of the year.
“Our teams have been focused on streamlining our plants to deliver higher volumes,” he said. “We expect to deliver further volume improvements in the second half of fiscal 2022 as harvest numbers improve and we continue to optimize the operational efficiency of our plants.”
In the Prepared Foods unit, Glendinning said higher average sales growth fueled sales that exceeded volume.
“Consumer demand has remained durable even as we’ve worked to manage inflation through price increases,” he said. “Overall, consumer response to higher price levels is below historical expectations as our brand strength and category relevance has enabled continuing strong demand.”
First half Pork segment labor challenges hindered first half volume compared to last year.
“We expect tightness in live hog inventories to affect our second-half volume,” King said.
Glendinning added that Pork’s operating income deterioration was driven by softer exports and higher input costs as well as labor challenges.
For the first six months of fiscal 2022, Tyson Foods’ net income was $2 billion, or $5.35 per share, and up from $943 million, or $2.58 per share, during the same period of the previous year.
First-half sales surged to $26.1 billion from $21.8 billion the year before.