Tyson Foods Posts Record Quarterly Sales Of $10.8 Billion, Income Up 21.6%

It is indeed a happy new year at Tyson Foods. The Springdale-based global meat processing, marketing and distribution company reported record revenue of $10.817 billion for the first fiscal quarter, up 23.4%. The quarterly net income of $309 million was ahead of the $254 million in the same quarter of 2013.

Per share earnings of 77 cents also beat the consensus analyst estimate of 73 cents. Also, the $10.817 billion in revenue was well ahead of the consensus estimate of $10.35 billion.

The improved numbers largely reflect the integration of Hillshire Brands into the Tyson portfolio. Tyson Foods completed the $8.5 billion acquisition of Hillshire in August.

“Tyson’s fiscal year is off to a great start with our first full quarter as a combined company producing record sales and adjusted operating income,” Donnie Smith, president and CEO of Tyson Foods, said in the earnings report issued Friday morning (Jan. 30). “We used our strong cash flows to pay down debt by $650 million in the quarter.”

The debt move is likely to be well received in investor circles. The Hillshire deal came with concerns that the expensive deal would be a debt burden on Tyson Foods.

“We are proceeding with the integration of Hillshire Brands. I want to thank our team members for their ability to quickly focus on the business as we brought the two companies together. The first quarter was a crucial time, and the team handled it well,” Smith noted in the earnings report.

The company also stayed with a healthy fiscal year per share earnings guidance in the $3.30-$3.40 range – or around $42 billion. The company earned $2.94 a share in the recent fiscal year.

“We expect fiscal 2015 sales to approximate $42 billion as we integrate Hillshire Brands and continue to accelerate growth in domestic value-added chicken sales and Prepared Food sales,” the company noted.

First quarter sales in the chicken segment totaled $2.78 billion, up compared to $2.656 billion in the first quarter of the previous fiscal year. Operating income in the segment was $351 million during the quarter, up almost 39%.

“Operating income increased due to higher average sales price and volumes in addition to lower feed ingredient costs which decreased $110 million during the first quarter of fiscal 2015,” the company said of its chicken segment.

As expected, the beef segment struggled. The company posted a $6 million loss compared to a $58 million gain in the first fiscal quarter of 2013. Total sales in the beef segment was $4.391 billion, up compared to the $3.734 billion in same quarter of 2013. The company said sales volume declined 2.7%, but average prices for beef jumped 20.9% in the quarter.

The pork segment posted total first quarter sales of $1.54 billion, better than the $1.424 billion in the previous year’s quarter. Operating income was $122 million, just slightly higher than the $121 million in the first quarter of 2013. The company said higher demand for pork combined with a smaller supply of hogs allowed the company to boost average prices by 7% during the quarter.

Bolstered by the Hillshire Brands business, Tyson Foods’ prepared foods segment had total quarterly sales of $2.133 billion, a big jump over the $907 million in the first quarter of 2013. Operating income in the quarter for the segment was $71 million, up 343.75% compared to the same quarter in 2013.

Shares of Tyson Foods (NYSE: TSN) closed Thursday at $40.18, and Friday pre-market action saw a more than 4% rise in the price. During the past 52 weeks, the share price has ranged from a $44.24 high to a $34.90 low.