Tyson Foods reported that its first quarter adjusted operating income declined 68% year-over-year.
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Adjusted operating margin was 3.4% for the quarter. Both lower revenue and higher COGS in Beef and Pork drove the decrease in adjusted operating margin.
The company said market dynamics and some operational inefficiencies impacted its profitability in the first quarter. Tyson Foods expects to improve performance through the back half of fiscal 2023. The company is also optimistic about the long-term outlook.
First quarter adjusted operating income was $453 million, compared to $1.43 billion, prior year.
Adjusted EPS of $0.85, down 70% from prior year.
Net income attributable to Tyson declined to $316 million from $1.12 billion, prior year. Net income per share attributable to Tyson was $0.88 compared to $3.07.
Sales were $13.26 billion, up 2.5% from prior year. Sales grew largely due to higher average sales prices and sales growth in Chicken and Prepared Foods segments, the company stated. Volumes were up 0.8% driven by all segments except Pork.
"We executed our strategy in Q1, growing volume, improving staffing levels, investing in automation and building inventory to meet customer demand, all while maintaining a focus on liquidity and financial health," said Tyson Foods CEO Donnie King.
Looking forward, Tyson Foods expects sales to be $55 billion to $57 billion in fiscal 2023, unchanged from prior outlook.
Tyson Foods expects total liquidity, which was approximately $2.9 billion at December 31, 2022, to remain above its minimum liquidity target of $1.0 billion. The company anticipates capital expenditures of approximately $2.5 billion for fiscal 2023.
Beginning in fiscal 2022, the company launched a new productivity program, which targeted an aggregate $1 billion in productivity savings by the end of fiscal 2024 relative to a fiscal 2021 cost baseline. The company believes it will exceed aggregate $1 billion target in fiscal 2023, a year ahead of the plan.
In the fourth quarter of fiscal 2022, the company approved a restructuring program. In conjunction with the 2022 program, the company plans to bring together all its corporate team members from the Chicago, Downers Grove and Dakota Dunes area corporate locations to its world headquarters in Springdale, Arkansas, through a phased relocation commencing in early calendar year 2023.
Tyson Foods noted that, as the company continues to evaluate its business strategies and long-term growth targets, additional restructuring activities may occur. ■
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