August 11, 2021

Tyson Foods to boost beef production as Q3 beef sales increase

Tyson Foods said it will boost its beef production in fiscal 2021 after its third-quarter beef sales volume surged 24% to US$4.95 million, up from US$3.65 million a year ago, due to strong global demand and "reduced production inefficiencies associated with COVID-19."

"Our foodservice volume improved as the restaurant industry began to reopen and recover," said Tyson Foods chief executive officer Donnie King in the company's third-quarter earnings release on August 9. "Our beef business increased production to meet strong US and international demand for higher-quality products."

Shares jumped on the news heading for the best percentage gain since June 2020.

Meanwhile, the meat processing giant expects its fiscal 2021 sales for chicken to be lower compared to the previous year based on current grain prices. Tyson's third-quarter chicken sales volume grew 3.3% to US$3.47 million, up from US$3.11 million a year ago. During the first nine months of fiscal 2021, sales volume fell 2.4% to US$9.86 million, compared to 9.8 million a year ago.

The chicken segment posted a third-quarter operating loss of US$279 million, widening from a loss of US$120 million a year ago, as costs for feed rose to US$270 million. The company also accrued an additional US$225 million in legal contingency costs to resolve allegations of chicken price fixing, bringing its total legal contingency accrual to US$545 million. Tyson's overall operating loss for the first nine months of fiscal 2021 is US$489 million, compared to a profit of US$36 million a year ago.

The United States Department of Agriculture estimates overall domestic beef production will increase by approximately 3% in fiscal 2021 compared to a year ago, while domestic production for chicken is expected to decrease less than 1% year over year.

Tyson reported a gross profit of US$1.62 million, compared to US$1.31 million a year ago, and quarterly net income of US$753 million, or US$2.05 per share, compared to US$526 million, or US$1.44 per share, a year ago. On an adjusted basis, Tyson earned US$2.70 per share.

Tyson's overall third-quarter sales came in at US$12.48 billion, compared to US$10 billion a year ago.

- Fox Business