Icon (Close Menu)

Logout

Tyson Foods Takes Stock of Fiscal Year As COVID Costs Mount

3 min read

Tyson Foods Inc. of Springdale on Thursday reported first-quarter income of $467 million, a decrease from $505 million in the same quarter a year ago.

Earnings amounted to $1.28 per share. Adjusted for non-recurring costs, earnings were $1.94 per share, which was up from $1.52 a year ago in the same quarter last year and ahead of analysts’ expectations of $1.58 per share, according to the Associated Press.

Quarterly revenue was $10.5 billion, down from $10.8 billion a year ago and short of Wall Street expectations of $11.08 billion.

The earnings report came on the same day the company held its 58th annual shareholders meeting, which took place virtually because of the pandemic. COVID-19 also had a continuing effect on Tyson Foods’ financials — the company reported $120 million in coronavirus-related expenses during the quarter; for the fiscal year 2021, Tyson Foods predicts a total expense of $440 million.

Board Chairman John Tyson opened the meeting by saying the company had faced difficult circumstances before, but he was proud of the way Tyson Foods’ management and employees have responded to the challenges.

“Tough times are nothing new for us,” Tyson said. “It is unquestionable that the pandemic created a world that not one of us had experienced.”

Tyson said he had seen Tyson Foods employees struggle during the pandemic, “as they deal with normal day-to-day issues in an external environment where normal is no longer available.”

The shareholders meeting went quickly and according to expectations. Shareholders approved the slate of 15 board members and ratified PricewaterhouseCoopers LLP as Tyson Foods’ independent accounting firm.

Shareholders also voted down three proposals submitted by shareholders. The first would have required the company to report on its due diligence on human rights, the second would have changed shareholders voting to one vote per share and the third would have required the company to fully disclose its lobbying expenditures.

Tyson Foods CEO Dean Banks praised the company’s commitment to its 119,000 U.S. employees during the pandemic, speaking about its partnership with Matrix Medical to provide vaccinations and the company’s hiring of a chief medical officer, 200 nurses and increased safety protocols. Tyson Foods has been sued by several families of employees who died of the coronavirus.

“The last 12 months has certainly presented a host of challenges and learning,” Banks said. “The health and safety of our team members remain our highest priority.”

Banks said the company generated more than $1 billion in operating income during the quarter, with its beef and prepared foods segments seeing the largest gains.

“As we navigate continued market volatility, our multi-protein portfolio creates the fuel for disciplined investments in higher margin, higher growth opportunities ahead,” Banks said. “We will continuously seek to remove unnecessary costs from the business and invest in the right areas. Looking forward, I’m confident that our team is executing on the right priorities to meet our commitments and drive shareholder value creation.

“We’re optimistic about the continued success of Tyson Foods, and we are positioned for long-term, sustainable growth. We have an incredible opportunity through our leadership in sustainability and social responsibility to drive a more sustainable future for our company and our planet.”

Tyson Foods’ beef segment reported sales of $3.99 billion, up from $3.8 billion. Operating income saw a marked increase to $528 million, up from $342 million. 

The company said part of the increase was because a fire at a Kansas facility had curtailed production in the first quarter of 2020. Tyson also said the revelation that a Washington beef supplier had allegedly misappropriated funds by claiming nonexistent cattle resulted in $55 million gain in cattle inventory for the quarter. Tyson is now suing that company.

The company’s pork segment reported sales of $1.43 billion, up from $1.38 billion a year ago. Operating income for the first quarter of 2021 was $116 million, down from $191 million, which the company said was because of the pandemic, production delays and the rising costs of livestock.

Tyson Foods’ chicken segment reported sales of $2.8 billion, down from $3.3 billion. Operating income was a loss of $216 million, a decrease from a profit of $57 million.

The operating income took a hit, the company said, because of the pandemic but mostly because of $320 million in “legal contingency accrual.” Tyson Foods recently agreed to pay $221.5 million to settle a price-fixing lawsuit.

The company’s prepared foods segment reported sales of $2.11 billion, down from $2.14 billion. Operating income was $266 million, an increase from $158 million. 

Tyson Foods’ international segment reported sales of $469 million, down from $498 million. Operating income was $11 million, up from $10 million.

Send this to a friend