Tyson Foods 2013 Annual Report Download - page 25
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25
Prepared Foods Segment Results in millions
2013 2012 Change 2013
vs. 2012 2011 Change 2012
vs. 2011
Sales $ 3,322 $ 3,237 $ 85 $ 3,215 $ 22
Sales Volume Change 1.9% (0.9)%
Average Sales Price Change 0.7% 1.6 %
Operating Income $ 101 $ 181 $ (80) $ 117 $ 64
Operating Margin 3.0% 5.6% 3.6%
2013 vs. 2012 –
• Sales Volume – Sales volume increased as a result of improved demand for our prepared products and incremental volumes
from the purchase of two businesses in fiscal 2013.
• Average Sales Price – Average sales price increased due to price increases associated with higher input costs.
• Operating Income – Operating income decreased, despite increases in sales volumes and average sales price, as the result of
increased raw material and other input costs of approximately $110 million and additional costs incurred as we invested in our
lunchmeat business and growth platforms. Because many of our sales contracts are formula based or shorter-term in nature, we
are typically able to offset rising input costs through pricing. However, there is a lag time for price increases to take effect.
2012 vs. 2011 –
• Sales and Operating Income – Operating margins were positively impacted by lower raw material costs of $75 million and
increased average sales prices, which were partially offset by lower volumes and increased operational costs of approximately
$30 million, largely due to costs related to revamping our lunchmeat business and the start-up of a new pepperoni plant.
Because many of our sales contracts are formula based or shorter-term in nature, we typically offset changing input costs
through pricing. However, there is a lag time for price changes to take effect, which is what we experienced during fiscal 2011.