Springdale, Arkansas-based Tyson Foods, the world’s largest processor and marketer of beef, chicken and pork, has reported US$0.3 diluted earnings per share (EPS) for its Q3 ended 29 June 2002, compared to US$0.09 diluted EPS year on year.
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The Q3 2002 diluted EPS figure is buoyed by an additional US$0.05 resulting from the partial settlement of about US$30m related to ongoing vitamin antitrust litigation. On 28 September 2001, Tyson completed the acquisition of IBP, and so fiscal 2002 results also include 100% of IBP’s operations.
Q3 sales were US$5.9bn, compared to US$1.92bn last year. Operating income was US$247m, up from US$58m in the same quarter last year with operating margin at 4.2% compared to 3% last year. Chicken segment operating margin was 5.6% for the current Q3 and 3.5% for the same quarter last year. Beef, pork, and prepared foods segments operating margins (loss) were 2.3%, (1.5)%, and 6.9%, respectively. Earnings for the Q3 2002 were US$107m compared to US$19m for the same period last year.
Sales for the first nine months of FY 2002 were US$17.61bn up on US$5.54bn last year. Operating income was US$699m compared to US$149m for the same period last year with operating margin at 4% compared to 2.7% in 2001. Chicken segment operating margin was 6.6% for the nine month period and 3% for the same period last year. Beef, pork, and prepared foods segments operating margins were 1.6%, 2.5% and 5.1%, respectively. Earnings for the first nine months of fiscal 2002 were US$299m compared to US$40m year on year.
Diluted EPS for the nine months of FY 2002 were US$0.84 compared to US$0.18 last year.
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By GlobalDataJohn Tyson, chairman and CEO, said: “I am pleased with our results for the quarter. Despite the difficult challenges we continue to face, our value-added protein portfolio worked to enable us to meet our EPS guidance. Our company continues to generate strong cash flows we can use to pay down debt and grow our business to meet the needs of our customers.”
At this time, Tyson expects Q4 2002 diluted EPS to be in the range of US$0.24 to US$0.28, and FY 2002 diluted EPS in the range of US$1.08 to US$1.12.
Q3 results by segment:
(in millions):
Q3 Sales Q3 Operating Income (Loss)
29 June 30 June 29 June 30 June
2002 2001 2002 2001
Beef $2,703 $— $63 $—
Chicken 1,858 1,795 105 63
Pork 552 32 (8) 2
Prepared Foods 766 78 52 2
Other 23 12 35 (9)
Total $5,902 $1,917 $247 $58
Beef segment sales were US$2.7bn, including beef case-ready sales of US$181m and global beef sales of US$344m. Beef segment operating income totalled US$63m.
Chicken segment Q3 sales were up US$63m or 3.5% from the same period last year, with a 1.9% increase in average sale prices and a 1.6% increase in volume. Foodservice chicken sales increased 7.2%, retail chicken sales increased 4.3% and global chicken sales fell 16.9%. Q3 sales of the company’s Mexican subsidiary increased 25% year on year, but were more than offset by decreases in other international sales demand as markets continue to be impacted by import restrictions and political pressures primarily in Russia and China. Operating income for Chicken increased US$42m from the same period last year primarily due to decreases in live and production costs along with improvements in price and growth in value added product mix.
Pork segment Q3 sales including IBP’s pork processing revenues were US$552m compared to US$32m year on year including current quarter pork case-ready sales of US$55m and global pork sales of US$62m. Pork segment operating income fell US$10m from the same period last year. Pork processing operating income was more than offset by negative live swine operations which resulted from lower live hog prices and an inventory devaluation.
Prepared Foods segment Q3 sales increased US$688m from the same period last year. The Prepared Foods segment operating income increased US$50m from the same period last year. The increase in both sales and operating income is due to the inclusion of IBP results. Operating income was positively affected by slightly lower and more stable raw material costs, improved product mix and lower operating costs.
Nine months segment review:
Sales Operating Income (Loss)
Nine Months Ended Nine Months Ended
29 June 30 June 29 June 30 June
2002 2001 2002 2001
Beef $7,846 $— $126 $—
Chicken 5,428 5,197 357 154
Pork 1,938 110 48 2
Prepared Foods 2,334 207 119 8
Other 60 29 49 (15)
Total $17,606 $5,543 $699 $149
Beef segment sales were US$7.8bn, including beef case-ready sales of US$533m and global beef sales of US$1bn. Beef segment operating income totalled US$126m. The Beef segment resulted from the acquisition of IBP.
Chicken segment nine months sales increased US$231m or 4.4% year on year, with a 2.3% increase in average sale prices and a 2.1% increase in volume. Foodservice chicken sales increased 5.5%, retail chicken sales increased 3.3% and international chicken sales increased 2.1%. International chicken sales increased primarily due to the acquisition of a production facility in Mexico in the Q3 2001. However, this increase was partially offset by decreases in other international sales demand as markets continue to be impacted by import restrictions and political pressures primarily in Russia and China. Operating income for Chicken increased US$203m from the same period last year primarily due to decreases in live and production costs along with improvements in price and growth in value added product mix.
Pork segment nine months sales were US$1.9bn compared to US$110m for the same period last year, with current year pork case-ready sales of US$158m and international pork sales of US$200m. Pork segment operating income increased US$46m year on year. The increase in both sales and operating income is due to the inclusion of the IBP pork processing results.
Prepared Foods segment nine months sales increased US$2.1bn year on year, and operating income increased US$111m. The increases are due to the inclusion of IBP results. Operating income was positively affected by slightly lower and more stable raw material costs, improved product mix and lower operating costs.
Other segment operating income increased US$64m primarily due to the partial settlement of about US$30m related to ongoing vitamin antitrust litigation combined with US$19m of IBP merger related expenses recorded in the prior year.
