Tyson Foods Inc. of Springdale reported second-quarter net income of $310 million, up 45 percent from the same quarter last year as sales in its Prepared Foods division shot up after the company’s purchase of Hillshare Brands last year.
The meat processor said quarterly revenue was $9.9 billion, up 10 percent from the same quarter last year. Earnings per share was 75 cents, up from 60 cents in the same quarter last year.
Analysts expected earnings of 72 cents a share and revenue of $10.1 billion.
Adjusted operating income was $553 million, up 53 percent from the same quarter last year.
“Our branded, value-added portfolio of complementary products has allowed us to achieve the balance needed to produce consistent, sustainable growth,” CEO Donnie Smith said in a news release. “We have structured our company to capitalize on the tailwinds and to manage through the headwinds in the parts of our business that are subject to commodity markets. By producing innovative, protein-centric foods, we are uniquely positioned to meet consumers’ needs for all meal occasions and all day parts, at home and away from home.”
Smith said executives are pleased at how Hillshire and Tyson have integrated, having captured $77 million in synergies in the second quarter. He said the company is raising its annual synergies target from $225 million to $250 million for the current fiscal year, $400 million for 2016 and $600 million by the end of fiscal 2017.
The company also reiterated its annual guidance of $3.30 to $3.40 adjusted earnings per share.
Boosted by the addition of Hillshire products, Tyson’s Prepared Foods division saw sales soar to $1.8 billion, up more than 117 percent from $861 million in the same quarter last year. Operating income was $160 million, up from $21 million in the same quarter last year.
Average sales prices rose more than 27 percent in that division, due to what Tyson Foods said was “price increases associated with better product mix,” mainly through the Hillshire acquisition.
Tyson purchased Hillshire Brands of Chicago for $8.5 billion, taking on a suite of well established brands including Jimmy Dean, Ball Park, State Fair and Hillshire Farm.
Tyson also cited strong performance in its Chicken segment, where sales were flat but margins rose to nearly 12 percent. The segment posted sales of $2.8 billion during the quarter. Operating income was $332 million, up from $234 million in the same quarter last year. The company said average sales prices grew due to market conditions and sales mix changes.
Other Tyson Foods’ divisions and results:
Beef — $4.1 billion in sales, up from $3.8 billion in the same quarter last year. The division posted a $20 million operating loss, down from $35 million in operating income last year. Tyson Foods cited a drop in sales volume amid a decline in domestic beef availability.
Pork — $1.2 billion in sales, down from $1.5 billion in same quarter last year. Operating income was $99 million, down from $107 million last year. The company said sales volume dropped due to the divestiture of its Heinhold Hog Markets business in the first quarter. Regulators required Tyson to sell the subsidiary, which produced $270 million in revenue in 2013, to alleviate concerns about the company’s potential domination of the hog market after its Hillshire purchase.
International — $222 million in sales, down from $328 million in the same quarter last year. The division posted a $15 million operating loss, down from an operating loss of $30 million last year. Tyson said sales volumes dropped amid weak demand in China and the sale of its Brazil operations to help pay for the Hillshire acquisition.
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