In an interview with The Wall Street Journal, Donnie King, CEO of Tyson Foods, recognized restraints to production in the chicken segment but indicated that corrective action is in progress.
Problems encountered included a drop in hatchability as a result of introducing a male breeder line in 2020 with the potential to increase yield at higher weights. These traits were apparently negatively correlated with fertility and as a result, chick production was impacted by approximately two percent. Restoration in chick production was delayed until maturity of additional parent flock placements to compensate for lower hatchability.
Tyson Foods has also experienced problems in staffing in common with other integrators processing and packing red and white meat. Tyson Foods has been in the forefront of mechanization and has introduced measures to improve efficiency in all areas of operation.
For the second quarter of Fiscal 2022 ending April 2nd, Tyson Foods posted net income of $829 million, a 75.8 percent increase over the second quarter of Fiscal 2021. Results in the chicken segment were affected by increased feed costs, amounting to $100 million during the quarter and $285 million for the half year, partly offset by gains in derivatives.
The Wall Street Journal commented on the loss experienced in Fiscal 2021. This was, in part, due to a nonrecurring $320 million legal settlement.
Fiscal 2022 guidance for the company includes revenue approaching $53 billion, an adjusted operating margin of 9 percent despite challenges represented by foreign currency exchange, supply chain disruption, labor shortages and higher ingredient costs.
Tyson Foods has committed to improving profitability and taking advantage of high prevailing prices in part due to reduced output relative to demand. In the current inflationary environment, there has been a downward shift in consumer purchases of beef to pork and from pork to chicken based on value.