USA, Springdale. Tyson is streamlining its corporate workforce and eliminating about 500 jobs across the company, mostly corporate office jobs located in Chicago and Arkansas. The job cuts are part of the company’s efforts to strengthen its overall financial fitness that consolidates some of the functions across the growing enterprise.
Tyson Foods CEO Noel White told TB&P (Talk Business & Politics) the company was on target to reach its $200 mill. cost savings for the fiscal year related to the company’s challenged chicken segment. Chickensales volume increased primarily due to incremental volume from a business acquisition, partially offset by lower volume from our rendering and blending business. Average sales price increased due to lower rendering and blending sales, which carry a lower average sales price, largely offset by broadly weaker chicken pricing as a result of market conditions. Operating income decreased primarily from challenging pricing conditions. Additionally, operating income in the first quarter of fiscal 2020 was impacted by $21 mill. in restructuring costs.
Beefsales volume decreased 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. Average sales price increased as beef demand remained strong. Operating income increased as Tyson continued to maximize their revenues relative to live fed cattle costs, partially offset by increased operating costs and $16 mill. of net incremental costs from a production facility fire.
Porksales volume increased due to increased domestic availability of live hogs and strong demand for our pork products. Average sales price increased associated with higher livestock costs and stronger export markets. Operating income increased as the company maximized our 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.
For fiscal 2020, USDA indicates domestic protein production (beef, pork, chicken and turkey) should increase approximately 3 to 4% from fiscal 2019 levels, but the company expects export markets to absorb the increased production.
Tyson expects industry fed cattle supplies to increase approximately 1% in fiscal 2020 as compared to fiscal 2019. They exepct ample supplies in regions where they operate plants. For fiscal 2020, the Beef segment's adjusted operating margin will be toward the upper end of 6.5% to 7.5%. In the segment pork the company expects industry hog supplies to increase approximately 4% in fiscal 2020 as compared to fiscal 2019. They calculate on increased livestock costs in fiscal 2020 as compared to fiscal 2019. For fiscal 2020, the Pork segment's adjusted operating margin will be 6% to 8%. USDA projects a 4% increase in chicken production in fiscal 2020 as compared to fiscal 2019. For fiscal 2020, the Chicken segment's adjusted operating margin will be 4% to 6%.