Business: Prepared foods and beef drive stron...
Business

Prepared foods and beef drive strong results

Imaog / Levine-Roberts
The company works on a full recovery of the Chicken business.
The company works on a full recovery of the Chicken business.

USA, Springdale. Tyson Foods, one of the world’s largest food companies and a recognized leader in protein with leading brands including Tyson, Jimmy Dean, Hillshire Farm, Ball Park, Wright, Aidells, ibp and State Fair, reported the results for the second quarter 2021.

The company delivered a strong performance in a complex operating environment with continued success in retail and improvements in foodservice as the industry is recovering. Tyson generated adjusted operating income growth of 32% for the first half of fiscal 2021, driven by solid results in Beef and Prepared Foods.The company will remain focused on the factors they can control and will continue to work for a full recovery of the Chicken business. They expect the investments in capacity expansion, product innovation and technology to create sustainable shareholder value.

Tyson incurred direct incremental expenses associated with the impact of Covid-19 totaling approximately $95 mill. and $215 mill. for the second quarter and first six months of fiscal 2021, respectively.

Second Quarter Highlights

  • GAAP EPS of $1.30, up 26% from prior year; Adjusted EPS of $1.34, up 68% from prior year
  • GAAP operating income of $720 mill., up 40% from prior year; Adjusted operating income of $739 mill., up 43% from prior year
  • Total Company GAAP operating margin of 6.4%; Adjusted operating margin of 6.5%
  • Liquidity of $2.6 bn. at April 3, 2021
  • Reduced total debt by approximately $1 bn. 
  • Worker safety remains top priority; over 42,000 team members vaccinated so far

Beef

Sales volume decreased during the second quarter of fiscal 2021 due to a reduction in live cattle processed partially associated with the impacts of severe winter weather and a challenging labor environment. Sales volume was relatively flat for the first six months of fiscal 2021 as the impacts in the second quarter were partially offset by strong domestic and export demand as well as the prior year impact of a fire which caused the temporary closure of a production facility for the majority of the first quarter of fiscal 2020. Operating income increased in the second quarter and first six months of fiscal 2021 due to strong demand as the company continued to optimize revenues relative to live cattle supply, partially offset by production inefficiencies and direct incremental expenses related to COVID-19. Additionally, operating income was impacted by approximately $60 mill. and $50 mill. of incremental net derivative gains in the second quarter and first six months of fiscal 2021, respectively, as compared to the second quarter and first six months of fiscal 2020. Further, operating income in the first six months of fiscal 2021 was impacted by a cattle supplier's misappropriation of Company funds, which resulted in a $55 mill. gain related to the recovery of cattle inventory as compared to a $54 mill. loss recognized in the first six months of fiscal 2020.

Pork

Sales volume decreased during the second quarter and first six months of fiscal 2021 due to a reduction in live hogs processed primarily associated with severe winter weather, which was partially offset by strong demand. Average sales price increased in the second quarter and first six months of fiscal 2021 due to strong demand. Operating income decreased in the second quarter and first six months of fiscal 2021 primarily due to production inefficiencies and direct incremental expenses related to Covid-19. Additionally, operating income in the second quarter and first six months of fiscal 2021 was impacted by approximately $50 mill. and $70 mill., respectively, of incremental net derivative losses as compared to the second quarter and first six months of fiscal 2020.

Chicken

Sales volume decreased during the second quarter and first six months of fiscal 2021 due to lower production throughput associated with Covid-19, disruptions due to severe winter weather, decline in hatch rate and a challenging labor environment. Average sales price increased in the second quarter and first six months of fiscal 2021 due to favorable sales mix and overall market conditions. Operating income decreased in the second quarter and first six months of fiscal 2021 primarily due to a $320 mill. loss from the recognition of a legal contingency accrual in the first quarter as well as $125 mill. and $140 mill. of higher feed ingredient costs in the second quarter and first six months of fiscal 2021, respectively. Operating income was further impacted in the second quarter and first six months of fiscal 2021 by production inefficiencies and direct incremental expenses related to Covid-19 and disruptions due to severe winter weather. Additionally, operating income in the second quarter and first six months of fiscal 2021 was impacted by $40 mill. and $110 mill., respectively, of incremental net derivative gains as compared to the second quarter and first six months of fiscal 2020.

Source: Tyson Foods
stats