Tyson Foods reported fourth-quarter earnings that missed analysts' profit expectations Monday, but booked record profits and revenue for the year on the strength of consumer demand for meat products.
The company's new Chief Financial Officer, John R. Tyson, on his first company conference call, addressed a recent incident in Fayetteville, saying he was embarrassed and apologized to investors and the company's workers. In a later call with reporters, he declined to provide more details.
John R. Tyson was arrested Nov. 6 after a Fayetteville woman called police to report she came home to find a man sleeping in her bed. Tyson, 32, of Springdale, was arrested in connection with public intoxication and criminal trespass, both misdemeanor offenses, and was released on bond later that day.
Springdale-based Tyson's chief financial officer, Donnie King, said an independent group made up of company directors was looking into the incident and would fully review the matter. He declined to say which directors would be part of the review.
In response to questions by analysts, King said he was comfortable with the three new top executives recently put in place at Tyson, including John R. Tyson.
"And I'm very happy with what I'm seeing out of all three of these today, and I think they will make us a better Tyson as we move forward," he said.
In late September, John R. Tyson was named CFO and continues to lead enterprise strategy and sustainability activities. He joined Tyson in 2019. Stewart Glendinning was named group president for prepared foods after serving as executive vice president and chief financial officer, and Amy Tu took over as president of the international and chief administrative office, expanding her role as executive vice president, chief legal officer and secretary for global governance and corporate affairs.
King also addressed recently announced plans to move Tyson executives based in Chicago and Dakota Dunes, S.D., to a new combined company campus in Springdale. He said Tyson has been working with the estimated 1,100 employees at both locations to encourage them to move to Northwest Arkansas, adding he should have a firm idea on how many will make the move sometime later in the day.
Tyson released its fourth-quarter and year-end results before the market opened Monday morning and hosted a call with analysts shortly afterward.
Shares of Tyson closed Monday at $64.83, down $2.58 or 3.8% in trading on the New York Stock Exchange. Shares have traded as low as $62.94 and as high as $100.72 over the past year.
The company reported net income of $538 million, or $1.63 per share, for the period ended Oct. 1, compared to $1.35 billion, or $2.30 per share, for the same period a year ago. A consensus of 10 analysts predicted earnings per share of $1.73 for the company's fourth quarter, according to Yahoo Finance.
Fourth-quarter revenue stood at $13.74 billion, compared to $12.81 billion for the year-ago period. A consensus of nine analysts put revenue at $13.49 billion.
"In this challenging macroeconomic environment with historically high inflation, consumer demand for protein remains relatively steady," King said during the call with analysts. "We remain well positioned to serve this demand."
For the year, Tyson Foods saw net income of $3.25 billion, or $8.73 per share, compared to $3.06 billion, or $8.28 per share, for 2021. Revenue for the year was $53.28 billion, a new record, compared to $47.05 billion for 2021.
Looking to fiscal 2023, the company anticipates sales of $55 billion to $57 billion. Beef production is expected to decline 6% with operating margins of 2% to 4%; pork production is expected to be flat with operating margins of 6% to 8%; chicken production should be up 2% with operating margins of 6% to 8%; and the operating margin for prepared foods is expected to be 8% to 10%.
During the call, John R. Tyson said construction is underway for six plants in the United States, with all expected to be in operation by the end of fiscal year 2023. During the same period, Tyson expects to add three plants in China and one in Malaysia.
For the fourth quarter, Tyson's beef segment posted sales of $4.86 billion, down from $5,01 billion last year. Sales volume was up 5.1% while average price was down 8.2% when compared to a year ago. The company noted the average sale price was down for the quarter because of reduced demand for premium cuts of beef as compared to exceptionally high demand in the fourth quarter a year ago. For the period, operating income was $375 million, down from $1.15 billion, with operating margins of 7.7%, down from $22.9% a year ago.
Sales of pork were $1.6 billion, down from $1.65 billion a year go. Sales volume was up 5% while the average price was down 8.2%. Inflation increased operating costs during the period, the company said. The segment posted a $55 million loss in operating income, down from a gain of $78 million a year ago, with operating margins posting a loss of 3.4%, compared to a gain of 4.7% a year ago.
Chicken sales for the fourth quarter were $4.62 billion, up from last year's $3.87 billion. Sales volume was up 1.1%, due in part to greater domestic production, while average price was up 18.2%. For the quarter, operating income was $340 million, compared to a loss of $3.5 million a year ago. The operating margin was 7.4%, compared to a loss of 3.5% a year ago.
Sales in the prepared food segment were $2.52 billion, up from $2.25 billion last year. Sales volume was up 0.3%, while average price was up 11.4%. Operating income for the quarter was $111 million, down from $823 million a year ago, with operating margins of 4.4%, compared to 36.5% for the fourth quarter of 2021.
The international/other segment posted a loss of $499 million, compared to a loss of $519 million a year ago. The segment posted an operating loss of $5 million, compared to an operating loss of $3 million for the fourth quarter of 2021.