Quarterly numbers
Trends
Tyson benefited from a strong protein market with increased demand fueling sales in its beef and pork segments. As restrictions eased and restaurants opened up, the foodservice channel gained traction, improving sales by approx. $1.3 billion, and this benefited the chicken and prepared foods segments. Prepared Foods benefited from sustained demand in the retail channel as well.
The pork segment reported the highest sales growth at 54% followed by beef at 36%. Chicken and prepared foods increased 12% and 14% respectively. Prices increased in double digits for all these three segments except prepared foods which recorded a rise of 9.7%.
Tyson incurred $55 million in costs associated with the pandemic during the third quarter. The company continues to face headwinds from the virus which are expected to cause a rise in operating costs in fiscal year 2021. Tyson expects to incur approx. $325 million of direct incremental expenses associated with the pandemic during the year, some of which could become permanent over time.
Outlook
Tyson estimates net sales to range between approx. $46-47 billion in FY2021. The company expects to tackle increasing inflation and a rise in raw material costs within its prepared foods division over the remainder of the year. On an adjusted basis, for FY2021, results within prepared foods are expected to be similar to FY2020. While the beef segment is expected to deliver better results in 2021 compared to the previous year, results within pork and chicken are expected to see a drop.
In general, the US Department of Agriculture (USDA) forecasts domestic protein production i.e. beef, pork, chicken and turkey, to increase less than 1% in FY2021 compared to FY2020. The USDA projects domestic beef production to increase approx. 3% and chicken production to decrease less than 1% this year versus the previous one. Domestic production of pork is estimated to stay relatively flat compared to last year.
Click here to access the full transcript of Tyson Foods’ Q3 2021 earnings conference call