Tyson Foods has insisted its chicken business is seeing “significant improvement”, while the US meat giant’s beef, pork and prepared foods segments are at least performing in line with expectations.
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Speaking at the Bank of America Merrill Lynch Credit Conference yesterday (4 December), Tyson VP and treasurer Ted Jones highlighted the improvements in Tyson’s chicken operating margins.
“Our chicken segment’s operating margin improved from -7.2% in the first half of fiscal 2009 to 3.5% in the second half,” Jones said. “We are still working to get chicken where it should be, but we’re starting the new fiscal year strong. We’re about two-thirds into our first quarter, and we’re pleased with how we’re doing.”
At the end of November, Tyson posted a full-year net loss of US$537m compared to an income of $86m in the previous year. However, the group has remained upbeat on the prospects for fiscal 2010.
In addition to improved industry fundamentals, Tyson said it is starting to see benefits from operational efficiencies, including better capacity utilisation, better yields, reduced freight, improved flexibility in processing plants and cost reductions, Jones claimed.
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By GlobalDataHe added that Tyson has shortened the length of its customer contracts, which allows a quicker response to input cost fluctuations.
“We also have a great new leadership team in Donnie Smith and Jim Lochner,” Jones said.
Donnie Smith, who headed Tyson’s poultry and prepared foods group, was named president and chief executive officer and Jim Lochner, head of fresh meats, was named chief operating officer, in November.
Tyson fresh meats – which comprises the group’s beef and pork units – performed “very well” in 2009, Jones said. Although cattle and hog supplies are expected to tighten in 2010, Tyson expects there will be adequate supplies to run its plants efficiently, he added.
Jones said one of the company’s key financial goals for 2010 is to reduce net debt. Tyson bought back $293m of its bonds in fiscal 2009 and in 2010 will be “opportunistic in purchasing bonds”.
