Shares of Tyson Foods Inc. (NYSE: TSN) were down 1.5% on Wednesday. The stock has gained 14% over the past 12 months. Earlier this week, the company reported its second quarter 2022 earnings results which beat market expectations for both revenue and earnings. Tyson also raised its guidance for the full year which was better than what analysts had been predicting. Here’s a look at the company’s expectations for the rest of the year:
Revenue
In Q2 2022, sales rose 16% to $13.1 billion from the same period a year ago. The top line improvement was mainly driven by higher average sales price and mix improvement. Volume during the quarter was down 1.5% year-over-year. Tyson witnessed high levels of inflation across every part of its business, namely grains, labor, live animals, raw materials and transportation costs.
Based on the strong results of the first half of the year, Tyson raised its sales outlook for FY2022 to a range of $52-54 billion from the previous range of $49-51 billion. The company expects volumes to grow 1-2% year-over-year.
Segments
Sales in the Beef segment rose 24% year-over-year in Q2 to $5 billion, driven by strong demand, which supported higher average sales price and volume. Operating margin of 12.7% was higher than last year. Tyson expects volume to improve in the second half of FY2022 and adjusted operating margin to range between 11-13% for the year.
In the Pork segment, sales totaled approx. $1.6 billion, up 6% YoY. Average sales increased 10.8% due to higher input costs while volume was down 4.8% due to labor challenges. Operating margins declined to 3.8%. For FY2022, adjusted operating margin is expected to be 5-7%.
Sales in the Chicken segment climbed 15% YoY to $4.1 billion in Q2. Volumes saw an improvement helped by strong consumer demand and operational improvements. Operating margin was 5%. Adjusted operating margin is expected to be 5-7% in FY2022.
Sales for the Prepared Foods segment were up 11% YoY to $2.4 billion. Total volume was down due to labor and supply chain challenges, an uneven recovery in the foodservice channel and the sale of the pet treats business. Operating margins were 11%. In FY2022, Tyson expects adjusted operating margin to be between 8-10%.
The company expects to see lower results in its International/Other segment during FY2022 due to supply chain disruptions and other pandemic-related impacts.
Capex, liquidity and savings
Tyson expects capital expenditures of approx. $2 billion for FY2022. Total liquidity, which stood at around $3.4 billion at April 2, 2022, is expected to remain above the minimum liquidity target of $1 billion. The company is targeting more than $400 million in productivity savings in FY2022 with a goal of reaching $1 billion in savings by the end of FY2024.
Click here to read the full transcript of Tyson Foods’ Q2 2022 earnings conference call