Tyson Foods' Chicken segment making progress

by Editor fleischwirtschaft.com
Monday, December 07, 2009

Three of the four operating segments of Tyson Foods, Inc. produced returns in fiscal 2009 at or above normalised levels, while its chicken business made significant improvement from the first to the second half of fiscal 2009, according to Ted Jones, Tyson's vice president and treasurer.

Jones, speaking at the Bank of America Merrill Lynch Credit Conference, predicted further progress in fiscal 2010.

The Chicken segment's operating margin had improved from -7.2% in the first half of fiscal 2009 to 3.5% in the second half, Jones said.

In addition to positive industry fundamentals, Tyson is starting to see benefits from operational efficiencies, including better capacity utilization, better yields, reduced freight, improved flexibility in processing plants and cost reductions, according to Jones. He added that Tyson has shortened the length of its customer contracts, which allows a quicker response to input cost fluctuations.

Tyson Fresh Meats, which comprises the company's Beef and Pork segments, performed very well in 2009, with Pork achieving its second best year ever and Beef achieving its third best year, excluding a goodwill impairment, Jones said. The Beef and Pork business model is based on the spread between revenue, the cutout value of the carcasses and the cost of livestock. Although cattle and hog supplies are expected to tighten in 2010, Tyson expects there will be adequate supplies to run its plants efficiently.