Tyson Foods Closes Year On Record Note

Tyson Foods closed its fiscal year on a strong note as it posted record sales and earnings, while announcing several leadership changes in its management structure.

The Springdale-based meat company recorded fourth quarter earnings of $261 million on sales of $8.89 billion. One year ago, Tyson Foods posted net income of $185 million on revenue of $8.32 billion.

For the full year, Tyson Foods registered profits of $778 million on revenue of $34.37 billion. In the previous fiscal year, Tyson recorded net income of $583 million on sales of $33.05 billion.

“We had a great fourth quarter, and 2013 was the best year in company history in terms of record sales and earnings per share,” said Donnie Smith, Tyson’s president and CEO. “The company achieved these results while buying back $550 million in stock, paying more than $100 million in dividends, continuing to build out operations in China and growing our prepared foods business through acquisitions and by entering new product categories.

SECTOR BREAKDOWNS:
Tyson Foods provided key sector performance metrics in its four major categories of business.

Chicken – Sales volumes grew due to increased domestic and international production driven by stronger demand for our chicken products. The increase in average sales price in the fourth quarter and 12 months of fiscal 2013 was due to mix changes and price increases associated with higher input costs. Since many of our sales contracts are formula based or shorter-term in nature, we were able to offset rising input costs through improved pricing and mix. Operating income was positively impacted by increased average sales price and volume, improved live performance and operational execution, as well as improved performance in our foreign-produced operations. These increases were partially offset by increased feed costs of approximately $30 million and $470 million for the fourth quarter and 12 months of fiscal 2013, respectively.

Beef – For the fourth quarter of fiscal 2013, sales volume rose as we increased production due to sufficient cattle supply and strong demand for our beef products. Sales volume decreased for the 12 months of fiscal 2013 due to less outside trim and tallow purchases. Average sales price increased due to lower domestic availability of fed cattle supplies, which drove up livestock costs. Operating income rose due to improved operational execution, less volatile live cattle markets and improved export markets.

Pork – Sales volume decreased as a result of balancing our supply with customer demand and reduced exports. Demand for pork products improved, which drove up average sales price and livestock cost despite a slight increase in live hog supplies. While reduced compared to the prior year, operating income remained strong in the 12 months of fiscal 2013 despite brief periods of imbalance in industry supply and customer demand.

Prepared Foods – Sales volume increased as a result of improved demand for our prepared products and incremental volumes from the purchase of two businesses in fiscal 2013. Average sales price rose due to price increases associated with higher input costs. Operating income decreased, despite increases in sales volumes and average sales price, as the result of increased raw materials and additional costs incurred as we invested in our lunchmeat business and growth platforms. Because many of our sales contracts are formula based or shorter-term in nature, we are typically able to offset rising input costs through pricing. However, there is a lag time for price increases to take effect.

MANAGEMENT RESTRUCTURING
The meat and protein giant also announced a number of key new leadership positions as it shifted some of its existing managers into new roles.

The following new senior leadership positions will report to the CEO:

• President of Prepared Foods, Customer and Consumer Solutions – Donnie King, currently senior group vice president of poultry and prepared foods
• President of Poultry – Noel White, currently senior group vice president of fresh meats
• President of Fresh Meats – Steve Stouffer, currently senior vice president of beef margin management
• Group Vice President of International – James Young, currently group vice president of international
• Executive Vice President of Strategy and New Ventures – Hal Carper, currently group vice president of R&D, logistics and technical services
• Executive Vice President of Program Management — Russell Tooley, currently senior vice president of corporate and international human resources

Two new leadership positions will report to the president of prepared foods, customer and consumer solutions:

• President of Prepared Foods — Wes Morris, currently group vice president of consumer products
• President of Sales and Marketing and Chief Commercial Officer — Devin Cole, currently group vice president of foodservice

Shares of Tyson Foods (NYSE: TSN) closed trading on Friday at $28.77. The company’s stock has traded between $17.65 and $32.40 per share during the last 12 months.