Higher prices for chicken and beef enabled Tyson Foods to offset reduced volumes during its first quarter and that has the company off to what president and CEO Donnie Smith called a good start to the fiscal year.
The nation’s largest protein producer said sales increased less than 1% to $8.4 billion from $8.3 billion, but profits grew nearly 11% to $173 million from $156 million and earnings per share increased 14.3% to 48 cents from 42 cents.
Smith said the company is on its way toward posting better results in 2013 than it did in 2012 despite facing expense pressures that arose after last summer’s extreme Midwestern drought damaged crops and increased the price of grain used for feed. As a result, Tyson’s overall volumes declined by 3.3%, but prices increased by 4.7%.
The trend was evident in the company’s largest segment, beef, where sales grew by a nominal amount to nearly $3.5 billion as an 11.7% increase in average price offset a 10% decrease in volume. The situation was more pronounced in the chicken segment where sales increased 7% to slightly more than $2.9 billion as volumes dropped by only 1.1%, but the average price increased by 8.2%. Sales in the pork segment declined to $1.4 billion as volume dropped 2.2% and average price declined 5.5%.
Looking ahead to the remainder of the year, Tyson expects its full year sales to total roughly $35 billion due largely to price increases as supplies of beef, chicken and pork will be flat to down slightly and grain prices will remain elevated. Even so, the company said capital investments in its businesses, strong liquidity and reduced interest expense would enable it to maintain strong operating results in 2013 despite challenging market conditions.