Tyson Foods Inc. Reports 12.9 Percent Fourth Quarter Sales Gain

Nov. 21, 2011
Tyson Foods Inc. reported 12-month results.

Tyson Foods Inc. reported the following 12-month results:

  • Record sales of $8.4 billion in the fourth quarter, up 12.9 percent compared to last year;
  • Overall Operating Margin was 2.0 percent in the fourth quarter 2011;
  • Chicken operating loss $(82) million, or (2.9) percent of sales;
  • Beef operating income $118 million, or 3.4 percent of sales;
  • Pork operating income $113 million, or 7.9 percent of sales;;
  • Prepared foods operating income $28 million, or 3.4 percent of sales;

"In fiscal 2011, we produced record sales and our second best EPS in company history despite record input costs, which included $675 million in additional feed and ingredient costs in our Chicken segment," said Donnie Smith, Tyson's president and chief executive officer in a prepared statement. "This is a testament to our quality, service and innovation and our focus on business fundamentals and operational efficiencies across all segments of our business.

"We will continue to build on the progress we've made in recent years and expect 2012 to be another strong year," Smith said. "Midway into our first fiscal quarter, all segments are profitable."

Despite reduced production in the fourth quarter, sales volumes increased due to a reduction of volumes in ending inventory in 2011 as compared to 2010. For the 12 months, a 2.1 percent increase in slaughter pounds that mostly occurred in the first three quarters of fiscal 2011 and a reduction of volumes in ending inventory in fiscal 2011 as compared to fiscal 2010, primarily drove the 4.6 percent increase in sales volume for fiscal 2011.

The increase in average sales prices is primarily due to mix changes and price increases associated with increased input costs.

Operating results were negatively impacted by an increase in grain and feed ingredients costs of $315 million and $675 million and an increase in other growout operating costs of $32 million and $74 million for the fourth quarter and 12 months of fiscal 2011, respectively.

Operating results were positively impacted by approximately $200 million of operational improvements, primarily attributed to improvements in yield, mix and processing optimization. These operational improvements were partially offset by an increase in operating costs, mostly from cooking ingredients and employee related costs.

Operating results included the following amounts for commodity risk management activities related to grain and energy purchases. These amounts exclude the impact from related physical purchase transactions, which impact current and future period operating results.