Tyson Foods saw its net income increase 49 percent during the first quarter of fiscal year 2016, rising to $461 million from the $309 million recorded during the first quarter of fiscal year 2015.
It was a record quarter for the company, in terms of operating income ($776 million), cash flows from operations ($1.1 billion) overall operating margin (8.5 percent), Chicken Segment operating margin (13.6 percent) and Prepared Foods segment operating margin (10.9 percent).
Net sales decline
However, Tyson Foods did see a reduction in net sales for the quarter, dropping from 10.8 billion during the first quarter of 2015 to 9.15 billion for the first period of 2016.
Tyson’s Chicken, Pork, Prepared Foods, Beef and Other segments all saw a decline in sales.
The company, in a press release, said the decrease in sales for the Chicken Segment was a result of “optimizing our buy versus grow strategy, partially offset by an increase in rendered product sales. It attributed the lower sales in the Pork Segment to the divestiture of its Heinold Hog Markets business in the first quarter of fiscal year 2015. The 2015 avian influenza outbreak that impacted Tyson’s turkey operations contributed to lower sales in the Prepared Foods Segment.
Executive commentary
Donnie Smith, president and CEO of Tyson Foods, was pleased with the company’s overall performance during the quarter.
“Fiscal 2016 is off to a very strong start in what we expect to be another record year,” said Smith. “Solid execution across the entire team resulted in record earnings, record operating income, record margins and record cash flows. We captured $121 million in total synergies for the quarter, with $61 million incremental to fiscal first quarter 2015.
“Our on-going efforts to invest in and grow our Core 9 product lines are paying off as sales volume for the most recent four week period was up 4 percent. The Core 9 product lines represent our strongest brands, greatest pricing power and best category growth opportunities and are major contributors to volume and profitability in the retail channel,” Smith said.
The Core 9 Smith mentioned consists of of nine retail product lines in the Tyson, Jimmy Dean, Hillshire Farm, Ball Park, State Fair and Aidells brands.
