Chicken segment plays major part in strong Q3 figures for Tyson Foods

A record 13.9% return on chicken segment sales has helped the major US meat business, Tyson Foods, deliver third quarter earnings which were well above expectations.

With the prepared food segment, also including some strong chicken and turkey items, up 10.9% for the quarter, the company’s overall operating income rose by 36%, compared with Q3 2015, to reach $767 million (£588m).

Explaining the chicken segment performance, Tyson’s president, Tom Hayes (pictured above), highlighted the company’s continued improvement of its product mix.

“We’ve grown our value-added sales by 5% and reduced our commodity sales by 10%,” he said, presenting this as a key reason why average selling price for the segment was up by 40 basis points during the quarter at a time when total sales volume was down 90 basis points, versus the same quarter last year.

“We’re being really strategic about our growth. We’re growing where we want to grow and it’s reflected in the record return on sales. As such, we’ve restructured our chicken business to produce higher and more stable margins over time.”

Key steps, in this context, have included optimizing the company’s cost structure, taking more than $1 billion (£766m) of inefficiencies out of its system; diversifying its pricing mechanisms, and upgrading its product mix to achieve increased value.

All of which has left the company with an expectation that its 2017 fiscal year will produce “more of the same” from its chicken segment, with a return on sales of around 12%, matching its projected full-year figures for fiscal 2016.

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