Improving the efficiency and profitability of its chicken segment has been a topic Tyson Foods officials have often spoke about during quarterly earnings calls over the past several years.
In the company’s most recent earnings call on February 5, the tone of those talks changed from how they are putting forth efforts toward improvement to how those efforts have led to improvement.
The numbers presented during that call seemed to back up those words.
Quarterly results
Tyson Foods as a whole reported a year-over-year decline in net income from $320 million during the first quarter of fiscal year 2023 to a net income of $114 million for the first quarter of fiscal year 2024.
However, the company’s chicken business segment showed numbers going in the opposite direction. The segment had an adjusted operating income of $192 million for the most recent quarter, which is up from an adjusted operating income of $77 million for the first quarter of the 2023 fiscal year. Tyson’s pork business segment was the only other segment to see a year-over-year gain.
This turnaround for the chicken business came in spite of a roughly 4% decline in sales ($4.03 billion versus $4.26 billion). Tyson Foods Chief Financial Officer John R. Tyson said that decline in sales was primarily driven by the impact of lower commodity protein prices and a 1.5% drop in volume, due to lower production.
Plant operations
Tyson Foods announced in 2023 it would close six of its poultry plants which were smaller, older and less efficient.
Those facilities operated in the communities of Glen Allen, Virginia; Van Buren, Arkansas; Noel, Missouri; Dexter, Missouri; North Little Rock, Arkansas; and Corydon, Indiana.
Of those, the Corydon plant is the only one that has not yet ceased production, and Tyson said operations are winding down there.
“We’re already seeing the benefits of these actions and we will continue to evaluate opportunities to drive efficiency across our segments,” said Tyson Foods CEO Donnie King.
Live operations
During the call, both Tyson and Wes Morris, Tyson Foods poultry group president, spoke about improvements in live operations.
Specifically, Morris said the company has improved its hatchability and livability rates.
Exports
Morris acknowledged that the export of chicken paws has slowed down because of trade restrictions related to highly pathogenic avian influenza (HPAI), but it has been a different story with leg quarters.
“Demand seems to be robust enough to clear at very attractive prices,” he said.
“We are seeing frozen inventory in the U.S. that are almost at record lows. Our inventory continues to be in check, and the pricing has been very good going forward.”
