The global food business, Tyson Foods, says it’s in a “great position” after reporting a 27% rise in operating income in the second quarter of its fiscal year and “record results” across many sectors.
“We’re generating momentum that will take us into 2017 and beyond,” said Tyson Foods’ president and chief executive officer, Donnie Smith, adding that the company expected “continued strong performance” in the second half of 2016.
Earnings from chicken continue to play a big part in the Tyson success story. The company’s Q2 chicken segment operating margin was a record 12.7%, heading the company’s pork segment margin of 11.8% and its prepared foods segment margin of 10.9%.
“We’ve differentiated our chicken business by being more consumer driven, upgrading our mix, diversifying our pricing mechanisms, improving our cost structure, implementing our ‘Buy vs. Grow’ strategy and providing industry-leading quality and customer service,” said the president.
The company is still looking for more growth from its chicken segment in the future, however.
“USDA data shows an increase in chicken production of around 2% in 2016 (fiscal) compared to 2015,” said Tyson Foods. “Based on current futures prices, we expect lower feed costs in 2016 compared to 2015 of approximately $200 million (£138m). Many of our sales contracts are formula based or shorter-term in nature, but there may be a lag time for price changes to take effect.
“For 2016, we now believe our chicken segment’s operating margin should be more than 12%, up from our previous estimate of more than 11% and above our new normalised range of 9-11%.”