Tyson Foods’s full-year operating income was hit by rising operating costs, export constraints and the increased cost of raw materials, which offset a rise in annual net sales.
For the full year ending 28 September 2019, Tyson – which owns major meat brands including Tyson, Jimmy Dean and Hillshire Farm – recorded a net sales rise of 8.8%, leading to total net sales of $42.4 billion, up from the $40.05 billion recorded in fiscal 2018.
However, despite this rise in sales, the company’s operating income dropped from $3.03 billion in 2018 to $2.82 billion in 2019, due largely to rising overhead costs.
The company operates four business divisions: beef, pork, chicken and prepared foods. Sales volumes decreased in the company’s beef segment, due largely to a reduction in cattle processing capacity following the temporary closure of a Kansas production facility following a fire, which led to incremental costs of $31 million.
Sales increased in the company’s pork and chicken units, with the former boosted by the increased availability of live hogs and strong demand for pork products, while chicken sales grew thanks to incremental volume increases from business acquisitions, such as the $340 million purchase of BRF’s Thai and European units.
Both units were affected by rising costs, with the pork unit suffering due to increased livestock supplies and export constraints, and the chicken unit was impacted by rising feed ingredient costs and mark-to-market derivative losses.
Despite the fall in operating income, Tyson’s management team seemed positive about the results. Noel White, Tyson Foods’ president and CEO said: “Fiscal 2019 was highlighted by significant progress in our strategy to grow our business through differentiated capabilities, deliver service and value to our customers, and sustain our company and our world for future generations.
“We expanded our global footprint, launched innovation in our iconic brands and our new alternative protein brand, and prepared for future growth by investing in technology and infrastructure.
“We’re very optimistic about fiscal 2020, and we currently expect to meet or exceed our long-term earnings algorithm of high single-digit adjusted earnings per share growth as we’re well-positioned to take advantage of opportunities in the global marketplace.”
© FoodBev Media Ltd 2020
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