SPRINGDALE, Ark. –  Despite slightly lower sales during its 2018 fiscal fourth quarter ended Sept. 29, 2018, Tyson Foods Inc. reported higher year-end sales compared to the same period last year and better-than-expected results from its Beef and Pork business segments and less volatility in its Chicken business.

During Q4 the company reported sales of $9.99 billion compared to $10.15 billion during the same period last year. Adjusted earnings per share (EPS) for the quarter of $1.58 topped the previous year’s EPS of $1.43 by 10 percent. Tyson’s Beef operating income of $347 million represented a margin of 8.9 percent compared to the same quarter last year. For the year the Beef segment produced a record $1.01 billion in operating income with margins of 6.7 percent. Strong cattle supplies and growing domestic and international demand are expected to continue into 2021 and Tyson expects margins over 6 percent in fiscal 2019.

Noel White, president and CEO, said the company was able to overcome hurdles during the year, including trade disputes, volatility in the market, rising freight costs, shifts in demand and pricing pressures. Despite trade interruptions, White said volumes for US beef and pork in the global market increased 12 percent and 7 percent respectively, as global demand has remained steady throughout the year. For fiscal 2018, overall sales of $40.05 billion resulted in a record adjusted EPS of $6.16, an increase of 16 percent over last year’s $5.31. Operating income in Tyson’s Prepared Foods segment of $868 million (compared to $462 million last year) was also a record high representing a margin of 10 percent for the year.

Pork sales for the quarter were $1.13 billion, down 2.7 percent from the same quarter last year and $4.88 billion for the year, with volumes down 2.1 percent from $5.24 billion in 2017.  Average sales price was down 14.5 percent. Pork margins for the quarter were 6.7 percent compared to 8.9 percent last year but 7.4 percent for the year, compared to 12.3 percent in 2017.

“We exceeded our revised guidance due to a strong finish in the fourth quarter in the Beef and Pork segments,” White said in a statement. He said the company looks to grow its value-added pork business through case-ready and premium programs in the coming year, including moving more pork product into the Prepared Foods segment to limit volatility.

“Prepared Foods drove margin expansion, while the Chicken segment closed the gap,” he said, due in part to lower grain prices and increased promotional efforts.

Chicken segment sales for the quarter were $3.12 billion with a 5.8 percent operating margin, compared to $3.04 billion during the same period last year. Sales volume increased by 10.4 percent, driven by acquisitions while average price decreased 7 percent “resulting from the changing product mix from acquisitions, increased domestic protein supplies and lower export prices,” according to White. 

“My focus is to grow our Prepared Foods, our value-added chicken and international businesses to help stabilize volatility and grow earnings,” White said, during his first earnings call with analysts since assuming the top leadership position with Tyson. White said the opportunities for the company looking ahead are in increasing sales of its value-added products and growing its international business, which will be bolstered once the company’s acquisition of Keystone Foods is finalized.

“Our algorithm for growth continues to be 3 percent value-added sales growth and high single-digit EPS growth annually over time,” White said, adding that the 4.2 percent growth in value-added sales exceeded that goal as did the 16 percent increase in EPS for the year.  

White said the company achieved $253 million in financial fitness savings during fiscal 2018, exceeding the goal of $200 million. The company’s capital expenditures in fiscal 2018 were $1.2 billion and are expected to top $1.5 billion in 2019.