USA, Springdale. Tyson Foods, one of the world’s largest food companies with brands including Tyson, Jimmy Dean, Hillshire Farm, Ball Park, Wright, Aidells, ibp and State Fair, reported their results for the second quarter 2020 and for the first six month of fiscal 2020.
Beef: Sales volume increased in the second quarter of fiscal 2020 due to stronger demand for beef products but decreased for the first six months of fiscal 2020 due to a reduction in live cattle harvest capacity as a result of a fire that caused the temporary closure of a production facility for the majority of the first quarter of fiscal 2020. Operating income in the second quarter of fiscal 2020 decreased as the result of volatile market conditions, increased operating costs and approximately $55 mill. of derivative losses. Operating income in the first six months of fiscal 2020 increased as the company continued to maximize their revenues relative to live fed cattle costs, partially offset by increased operating costs, derivative losses and $16 million of net incremental costs from a production facility fire.
Pork: Sales volume increased in the second quarter and first six months of fiscal 2020 due to increased domestic availability of live hogs and strong demand for pork products, especially in the consumer products and export sales channels during the second quarter. Average sales price increased in the second quarter and first six months of fiscal 2020 associated with higher livestock costs and stronger export markets. Operating income was relatively flat in the second quarter of fiscal 2020 and increased in the first six months of 2020 as Tyson maximized revenues relative to the live hog markets, partially attributable to favorable export markets and improved operational performance, which were slightly offset by higher operating costs.
Chicken: Sales volume decreased in the second quarter of fiscal 2020 due to lower volume from their rendering and blending business. Sales volume increased in the first six months of fiscal 2020 primarily due to incremental volume from a business acquisition in the first quarter of fiscal 2019. Operating income decreased in the second quarter and first six months of fiscal 2020 primarily from challenging pricing conditions and an approximately $40 mill. increase in net feed ingredient costs and derivative losses in addition to $21 mill. in restructuring costs incurred in the first six months of fiscal 2020.
For fiscal 2020, USDA indicates domestic protein production (beef, pork, chicken and turkey) should increase approximately 3 to 4% from fiscal 2019 levels, but Tyson expects export markets to absorb much of the increased production.