Tyson Foods net income jumps in second quarter
Company sets operating margin records for poultry and pork segments
Tyson Foods reported a significant jump in net income for the second quarter of fiscal year 2016, achieving a net income of $434 million, up from the $311 million achieved during the second quarter of 2015.
The increase in net income came despite a drop in net sales. The company saw net sales of almost $9.2 billion in the first quarter of 2016, down from the nearly $10 billion in net sales for the same quarter of 2015.
Tyson Foods Chicken Segment
Tyson Foods set a record for its Chicken Segment’s operating margin, which hit 12.7 percent for the quarter.
“We’ve differentiated our chicken business by being more consumer driven, upgrading our mix, diversifying our pricing mechanisms, improving our cost structure, implementing our ‘buy vs. grow’ strategy and providing industry-leading quality and customer service,” said Tyson Foods president and CEO Donnie Smith. “Because of the actions we’ve taken, and because those actions have proven to produce higher, more stable margins, we’re raising the annual normalized margin range for the chicken segment to 9-11 percent.”
According to a press release from Tyson Foods, the Chicken Segment’s sales volume increased in the second quarter of fiscal 2016 as a result of stronger demand for Tyson chicken products. For the six months of fiscal 2016, sales volume was flat as demand for chicken products was offset by optimizing mix and the buy vs. grow strategy. Average sales price decreased as feed ingredient costs declined, partially offset by mix changes. Operating income increased due to improved operational execution and lower feed ingredient costs. Feed costs decreased
Tyson Foods Pork Segment
The company also set a record for its Pork Segment’s operating margin, which reached 11.8 percent.
Sales volume increased in the second quarter of fiscal 2016 driven by better demand for pork products. Sales volume decreased for the six months of fiscal 2016 due to the divestiture of Tyson’s Heinold Hog Markets business in the first quarter of fiscal 2015. Excluding the impact of the divestiture, the company’s sales volume grew 3.1 percent, driven by better demand for pork products. Live hog supplies increased, which drove down livestock cost and average sales price. Operating income increased as the company stated it maximized its revenues relative to live hog markets and due to better plant utilization associated with higher volumes.