Tyson Foods recorded a 0.4% reduction in first-quarter sales as the company struggled with “challenging market conditions” in the pork sector.
For the three months to December 29, the US meat processor – owner of brands such as Jimmy Dean and Sara Lee – recorded sales of $10.19 billion. Operating income shrank 12.5% to $807 million.
The company said it is experiencing impacts to domestic and export prices, primarily chicken and pork, resulting from uncertainty in trade policies and increased tariffs. All the firm’s four segments experienced increased operating and labour costs during the quarter.
Pork producers in the US have been hit by retaliatory tariffs recently from both China and Mexico, leading to excess domestic availability of pork products. Tyson said it is working to increase its revenue per head as well as expand its export business.
Meanwhile, sales in the company’s largest segment, beef, were up 1%, partly thanks to strong export demand and more favourable domestic market conditions associated with an increase in cattle supply.
Noel White, who was appointed Tyson Foods CEO last September, said in an earnings call: “Strong organic growth in prepared foods and strong beef fundamentals led the performance while pork and chicken performed well given market conditions. The dynamics across the different businesses highlight the advantage of Tyson’s diversified business model, but they work together to provide balance and opportunity for long-term growth.
“In the prepared food segment, it was a record first quarter with $268 million in operating income and a 12.5% return on sale, building on the momentum of the record year in 2018. With quarter performance of prepared foods is obscured by divestitures of several non-core businesses last year. When those are excluded prepared foods delivered over 3% revenue growth and double-digit profit growth in the first quarter and modest volume increases. This demonstrates the effectiveness of branded value-added multi-channel prepared foods model.”
He added: “We are combining our creativity, our scale and our resources to make great taste in protein alternatives that more accessible for everyone both domestically and internationally. We will be leveraging all the resources we have at our disposal. Our insights, our innovation, manufacturing, sales, distribution and a global platform. And in the weeks ahead, you’ll be hearing more from us as we announce new products in the alternative protein space.”
The results were published as Tyson reached an agreement to acquire the Thai and European operations of BRF for $340 million, expanding its offerings of value-added protein in global markets.
The purchase includes four poultry processing facilities in Thailand, one in the UK and one in the Netherlands.
© FoodBev Media Ltd 2019