Northwest Arkansas Democrat-Gazette
Record profit predicted for 2016, Tyson chief says
Tyson Foods projected record profit for the year, citing a sharp drop in feed and livestock costs that offset falling revenue this quarter, before its annual shareholder meeting in Springdale on Friday.
“Fiscal 2016 is off to a very strong start in what we expect to be another record year,” said Donnie Smith, the company’s chief executive. “Solid execution across the entire team resulted in record earnings, record operating income, record margins and record cash flows.”
The company forecast earnings of $3.85 to $3.95 per share by fiscal year-end, up from an earlier estimate of $3.50 to $3.65.
First-quarter profit grew 49 percent from the same time last year to $461 million,
or $1.15 a share, according to Tyson’s earnings report. Analysts surveyed by Thomas Reuters forecast earnings of 89 cents a share. Revenue slipped, down to about $9.2 million from last year’s $10.8 million.
Tyson stock surged about 5 percent, closing at $57.10 Friday. Before the close, the stock hit an all-time high of $58.95 a share.
“It was a good day for the stock and a great day for Tyson stockholders,” said Bob Simmons, senior vice president at Simmons First Investments Group.
The company will continue to invest in and build its portfolio of brands that includes Tyson, Jimmy Dean and Hillshire Farms, Smith said in an earnings call with analysts.
The company’s top nine “core” brands have grown 4 percent in sales in the past four weeks. These brands represent the best opportunities the company has for growth in the next fiscal year, Smith said.
“We are finding ways to upgrade that raw material into higher value opportunities,” he said. “It’s not the same chicken business it was a few years ago.”
Revenue from chicken sales fell about 5 percent from the same time last year — from $2.78 billion to $2.64 billion . But the operating income of the company’s chicken division increased about 2 percent to $358 million, helped by a $60 million decrease in feed ingredient costs.
The volume of sales in the company’s beef division decreased primarily because of the closure of a plant in Denison, Iowa, last year, and sales prices were driven down by a high supply of beef in the market. Tyson still reported an operating income of $71 million, up from a loss of $6 million last year, because of low livestock prices.
John Tyson, chairman of the board of directors, shared the company’s optimistic outlook at the annual shareholder meeting in Springdale.
Shareholders voted down six proposals at the meeting, submitted largely by activist and religious groups which included the Humane Society and Oxfam America, an anti-poverty group.
Two of those proposals were aimed at loosening the Tyson family’s control over the company. The family controls about 70 percent of voting shares through a twotiered stock system.
One proposal — to break down the two-tiered stock system — was defeated with about 76 percent of the vote. About 22 percent of stockholders voted for the proposal. Another proposal to install an independent chairman garnered about 16 percent of the vote.
Most shareholder proposals, including one that called for a water stewardship program and one that asked for a report on worker conditions, failed with at least 80 percent votes against them.
“I heard these comments,” John Tyson said at the shareholder meeting. “Our family is concerned about any and all issues that were raised and will be raised.”
About 40 local poultry workers protested outside the Tyson shareholder meeting Friday, organized by the Northwest Arkansas Workers Justice Center and Oxfam America.
The Northwest Arkansas Workers’ Justice Center released a report on the conditions of Arkansas poultry workers earlier this week, which the group said included interviews with 500 poultry workers in the state. The report found that the workers don’t earn enough to support their families, fear retribution by employers for absences from illness, and experience wage and hour violations.
“Industry-wide, the poultry industry is an unsafe, unhealthy place to work,” said Walter Hinojosa, president of the center’s board of directors. “The workers get taken advantage of and, often, cheated out of their wages.”
Tyson said in a statement the company has met several times with Oxfam and has reached out to the Northwest Arkansas Worker’s Justice Center.
“We wouldn’t be a successful company without our team members,” the company said. “We care about them and we’re continually working to make sure they’re treated fairly.”
Tom Super, president of the spokesman for the National Chicken Council, said poultry line workers often make more than the federal minimum wage because poultry companies are in tight competition for workers. Tyson raised wages for most workers at chicken plants last year.
“The poultry industry is proud of the advancements in worker safety that have been made over the past 30 plus years and the ongoing efforts for its improvements,” Super said.