Donnie King
President and Chief Executive Officer at Tyson Foods
Thank you, Megan. I'll start by saying that the safety of our team members continue to be our top priority and I'm very pleased that we now have a team in the US that is fully vaccinated. As we focus on meeting the needs of our customers and consumers, vaccination is the best way that we can protect our team members from the impacts related to COVID-19 and ensure business continuity.
Earlier today, we reported strong fourth quarter and fiscal year 2021 results. We delivered double-digit sales and earnings growth in a challenging year. Our performance was supported by continued strength in consumer demand for protein. Our retail core business lines which include our iconic brands Tyson, Jimmy Dean, Hillshire Farm and Ball Park have driven strong share growth in the retail channel delivering 13 quarters of consecutive growth. Continued recovery in the foodservice channel led by QSRs also supported our strong results.
Overall, we saw our volume recovery in the second half from the pandemic lows to finish the fiscal year only slightly down. We are taking several deliberate actions by segment to improve our volumes including investing behind capacities, brand and product innovation and our team members. Our investments in team members include our successful vaccination mandate as well as automation and technology initiatives that I'll discuss in a moment. The construction of the 12 new plants that we've mentioned previously are progressing well and once complete will enable Tyson to address capacity constraints and growing global demand for protein. These new capacities include nine chicken plants, two case-ready beef and pork plants and one new bacon plant.
In parallel to our actions to improve volume, we have also work to recover inflation through pricing, achieving a 13% price improvement for the fiscal year and a 24% increase for the fourth quarter. In this dynamic environment, we will be aggressive in monitoring inflation and driving price recovery activities. And the diversity of our portfolio showed its value again this quarter as demonstrated by earnings, performance in our beef segment supported the delivery of a strong fiscal year earnings results.
Our performance has allowed us to build financial strength. Our balance sheet is strong, resilient and provides Tyson the optionality needed to pursue strategic growth priorities. And to that point, our investment in future growth across our portfolio continue. We demonstrated resilience in fiscal year 2021 and we are entering fiscal 2022 with tremendous momentum. Our results demonstrate the dedication of our global team, the importance of our diverse portfolio strategy and our ability to meet consumer demand across proteins, channels and meal occasions.
Now turning to financial results, let me give you some highlights overall. I was pleased with both a strong quarter and full year. Sales improved 20% in the fourth quarter and 11% during the full year. Our sales gains were largely driven by higher average sales price. Average sales price trends reflect successful pricing strategies during the ongoing inflationary environment, but we still have opportunities specifically in prepared foods where we delivered softer results than anticipated. Like many other companies, we were faced with a range of higher levels of inflation notably higher grains, labor, meat and transportation cost.
Our teams have worked together with our customers to pass along that inflation through price increases. On volume, we saw improvement in the second half relative to the same period last year. Volumes were up 3% for the second half or nearly 350 million pounds. Although we are working diligently to achieve optimal throughput across our segments, labor challenges are still impacting our volumes and ability to achieve optimal mix across our processing footprint. Having said that, we're taking aggressive active actions as a team to address labor constraints and we're seeing improvements. We delivered solid operating income performance, up 26% during the fourth quarter and 42% for the full year. This performance was largely due to strength in our beef segment where continued strong consumer demand and ample cattle supply have driven higher earnings. Overall, our operating income performance translated to earnings per share of $2.30 for the fourth quarter, up 35% and $8.28 for the full year, up 53%.
Looking at our results on volume, we are taking aggressive actions to optimize our existing footprint, add new capacity, adjust our product mix by plant and match our portfolio more closely with customer and consumer needs. For the fiscal year, our volume was down slightly. Customer demand during the fiscal '21 outpaced our ability to supply products, but we're working aggressively to fill that void. We recognize how important service levels are to our customers and we're committed to improving our fill rates and reliability of supply.
With respect to supply, we have focused on ensuring our ability to maintain business continuity and our team has been resilient in the face of numerous supply chain challenges. As we look toward fiscal '22, improving volumes will be key to delivering against our commitments. We expect to grow our total Company volumes by 2% to 3% next year, outpacing overall protein consumption growth. A large percentage of that growth will come from the chicken segment and across our business we're working to optimize our product portfolio, remove complexities, enhance capacities and pursue operational improvement initiatives to deliver against these volume growth objectives.
Moving now to slide 6, we acknowledge the challenging and competitive labor environment and it is no secret that we want to be the most sought after place to work. We fully understand that this starts with an unrelenting focus on safety, every minute, every shift, every day. The health, safety and wellness of our team members has been and will continue to be our top priority. So I'd like to take a minute to stop and commend our team members and our leadership team for doing their part to keep themselves, their colleagues, their families and their community safe, which has helped us reach our vaccination goals. The vaccines and investments in COVID-19 protection measures are certainly not the only actions that we've taken to become the most sought after place to work.
To ensure that every Tyson team member feels as though they can bring their true and complete self to work each day, we've invested behind diversity, equity and inclusion efforts and we also understand the importance of a strong compensation offering and we believe that we hold a leadership position in this space. We have raised wages and across our business today, we pay an average of $24 per hour, which includes full medical, vision, dental and other benefits like access to retirement plan and sick pay, and we will continue to explore other innovative benefit offerings that remove barriers and make our team members lives easier.
We're also accelerating investments in automation and advanced technologies to make existing roll safer and easier while reducing cost. We're confident that our actions will increase Tyson staffing levels and position us for volume growth. Relating to operational excellence and market competitiveness, today we are announcing the launch of the new productivity program designed to drive a better, faster and more agile organization that is supported by culture of continuous improvement and faster decision-making.
The program is targeted to deliver $1 billion in recurring productivity savings by the end of fiscal '24 relative to fiscal '21 cost baseline. These savings are included in the guidance expectations that Stewart will share in a moment. Execution of the effort will be supported by our program management office that will ensure delivery of key project milestones and report on savings achievements connected to three imperatives.
The first is operational and functional excellence and is targeted to deliver greater than $300 million in recurring savings. This includes functional efficiency efforts in finance, HR and procurement that are focused on applying best practices to reduce cost. The second is digital solutions, which is targeted to deliver more than $250 million in recurring savings. We'll achieve this goal by leveraging new digital solutions like artificial intelligence and predictive analytics to drive efficiency and operations, supply chain, planning, logistics and warehousing. For example, we're using technology to ensure that our shipments are optimally loaded to say freight cost and enhance customer service levels.
In many ways the pandemic has already accelerated our push to more digital footing and our commitment in this space will continue that focus. The third is automation. We will leverage automation and robotics technologies to automate difficult and higher turnover positions. For example, we have substantial opportunity to automate the debone process within our poultry harvest facilities using the combination of both third-party and proprietary technologies.
Chicken remains the top priority for me personally and for our Company. We continue to execute against our roadmap to bring operating income margin to at least the 5% to 7% range on a run rate basis by mid fiscal '22. Our goal has not changed and we remain committed to restoring top-tier performance. The first imperative is to be the most sought after place to work. I've outlined the investments we're making to enhance our team member experience in my earlier comments. This will ensure that we have the right levels of staffing to fulfill our customer orders on time and in full. The second imperative is to improve operational performance. Critical to improving operational performance is maximizing our fixed cost leverage, which means having enough birds in our internal networks to run our plants full. By reconfiguring and optimizing our existing footprint, we can increase our harvest capacity by more than 10% without building another plant.
In addition, we have clear initiatives to remove complexity from our plant, reduce transportation and handling and minimize waste. Our operational improvements will unlock significant unused capacity in our network and take advantage of the fixed cost leverage. Each of these initiatives will support leading operational performance from our chicken business in the future. Hatch rates have impacted our ability to do this and we've shared the initiatives underway to correct this. Our new male rollout is progressing as planned and we believe we've hit the inflection point that will lead to sequential improvements through the entirety of fiscal 2022.
The new male rollout at our pellet [Phonetic] farms is nearly complete and we continue to observe improved hatch rates associated with these new males. We've also mentioned how strengthened spot prices for commodity chicken products throughout the fiscal year has put our buy versus grow program at a relative disadvantage versus history. From Q3 to Q4, we again reduced our rate of outside purchases this time by nearly 30%. The final imperative is to service our customers on time and in full. Tyson's branded value-added product offerings have continue to gain share during both the fourth quarter in the latest 52 weeks and new capacity expansions will help us maintain momentum.
Inflation has clearly had an impact on the business. Our commercial teams have successfully pursued inflation justified pricing delivering top line growth for the business to offset the cost increases. As rates of inflation continue, so with our pricing actions with an equivalent level of instances [Phonetic] on disciplined operational execution and volume throughput. We will staff our plants, service our customers, grow volumes and be the best chicken business. The plan we have in place is still the right plan and our level of confidence, conviction and excitement as a team continue to grow.
Looking forward to fiscal year 2022, I feel confident in our ability to drive value creation. We have strong consumer demand, a powerful and diverse portfolio across geographies and channels and the team that is positioned to take advantage of the opportunities in front of us. Our priorities are clear, winning with customers and consumers, winning with team members and winning with excellence in execution. With these priorities as our guide, we are taking aggressive actions to accelerate our growth relative to the overall market, improve operating margins and drive strong returns on invested capital.
We are committed to our team members with a focus on ensuring their health, safety and well-being as well as ensuring an inclusive and equitable work environment, every shift, every day, every location with no exceptions. We have shown that we are willing to take bold actions in support of this commitment. Second, we are working to enhance our portfolio and capacity to better serve demand. This includes increasing the contribution of branded and value-added sales by focusing our product portfolio and by adding capacity to meet demand. We expect our volume to outpace the market in the intermediate term. Third, we are aggressively restoring competitiveness in our chicken segment. This starts by returning our operating margin to the 5% to 7% level by the middle of fiscal 2022.
Fourth, we are driving operational and functional excellence and investing in digital and automation initiatives. This is at the heart of our new productivity program. We are working diligently to drive out waste, minimize bureaucracy, enhance decision making speed across the organization.
Finally, to address expected demand growth over the next decade, we're using our financial strength to invest in our business through both organic investments and strategic M&A. On capital loan, we expect to invest $2 billion in fiscal year '22 with a disproportionate share focused on new capacity and automation objectives. Tyson has the right portfolio, the consumer-driven insight and the scale and the capabilities to win in the marketplace across proteins, channels and meal occasions. We also have the financial strength to invest behind our business to accelerate growth and to maintain our momentum. I look forward to sharing with you our progress as we work through the year and I'll be sharing more details with you at our Investor Day in a few weeks.
I'll now turn the call over to Stewart to walk us through our financial results in detail.
