USA, Springdale, Ark. Tyson Foods Inc. raised its annual guidance to $4.20–$4.30, as strong consumer demand along with lower costs for feed combined to lift the company’s net income 40% in the second quarter.
For the quarter ended 2 April, Tyson reported net income of $432 mill., or $1.07 per share, compared with $310 mill., or 75 cents per share in the year-ago quarter. Sales for the quarter eased 8.1% to $9.17 bn. from $9.98 bn.
For the six months ended 2 April, 2016, net income was $893 mill., up from $619 mill. in the first six months of fiscal 2015. Sales for the first six months slipped 12% to $18.3 bn. from $20.8 bn. reported in the first six months of fiscal 2015.
Feed costs decreased $80 mill. and $140 mill. during the second quarter and six months of fiscal 2016, respectively in the company’s chicken business. Adjusted operating income advanced to $347 mill. from $332 mill. on improved operational execution and lower feed ingredient costs. Sales volume increased during the second quarter on stronger demand for Tyson chicken products.
In the beef segment, adjusted operating income increased to $40 mill. from a loss of $20 mill. a year ago due to more favorable market conditions associated with an increase in cattle supply which drove down costs for fed cattle. Sales volume advanced on higher live cattle processed.
Excluding the impact of the divestiture of the company’s Heinold Hog Markets business, sales volume in Tyson’s pork business grew 3.1% on improved demand for pork products. Adjusted operating income in the segment was $140 mill., up from $99 mill. in 2015.
In the prepared foods business, adjusted operating income advanced to $197 mill. from $157 mill. in the second quarter of 2015. Sales volume in the segment was flat, but declined in the in the first six months of fiscal 2016.
Operating income improved on product mix changes as well as lower input costs of approximately $95 mill. The segment also benefitted from $111 mill. in synergies, of which $41 mill. was incremental synergies in the second quarter of fiscal 2016 above the $70 mill. of synergies realized in the second quarter of fiscal 2015.