Tyson Foods Inc. Reports 14.8 Percent First Quarter Sales Gain

Tyson Foods Inc. reported first quarter 2011 earnings per share was $0.78 compared to $0.42 last year. This included $11 million, or $0.03 per diluted share, related to a gain on a sale of interests in an equity method investment.

First quarter sales were $7.6 billion, up 14.8 percent compared to last year.

Overall operating margin was 6.5 percent: chicken operating income $181 million, or 6.9 percent of sales; beef operating income $116 million, or 3.6 percent of sales; pork operating income $177 million, or 14.3 percent of sales; prepared foods operating income $28 million, or 3.5 percent of sales.

First quarter fiscal 2011 included an $11 million, or $0.03 per diluted share, gain related to a sale of interests in an equity method investment.

"Tyson produced record sales and earnings for the fiscal first quarter of 2011," said Donnie Smith, president and chief executive officer in a prepared statement. "The chicken, beef and pork segments produced operating income in or above their normalized ranges. With strong operating cash flows, we reduced our net debt to a 10-year low of $1.4 billion, down $132 million from the fiscal fourth quarter of 2010. Return on invested capital was strong at 26 percent.

"Our performance is due to on-going, sustainable operational improvements across all four segments," Smith said. "Our view of 2011 is basically the same as it was a few months ago. Beef and pork are off to a great start, and their combined results in 2011 should be similar to 2010. Since 2008, our chicken segment has produced approximately $600 million in performance improvements, with nearly all of that amount coming from operational efficiencies. There are more opportunities to realize, which will contribute to chicken's profitability in the remaining quarters of the fiscal year.

"Because of the structural changes we've made throughout our businesses, we are competing effectively, even within the volatile markets we're facing," Smith said. "While 2011 will have its challenges, it has the potential to be comparable to 2010."

In fiscal 2011, overall domestic protein (chicken, beef, pork and turkey) production is expected to slightly increase. Because exports are likely to grow as well, we forecast total domestic availability of protein to be down slightly compared to fiscal 2010, which should continue to support pricing.

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