Addressing the J.P.Morgan Global High Yield & Leveraged Finance Conference in Miami, Fla., Tyson Foods Inc. Chief Financial Officer Dennis Leatherby said Tyson has made significant progress in its day-to-day operations and is committed to improving its competitive position.
He cited the company’s recent first-quarter record of $0.42 earnings per share and return on sales above the normalized ranges for its beef, pork and prepared foods segments. Chicken operations have continued to bounce back, he said, although exports to Russia have fallen.
Russia used to make up half of Tyson's export market, but now accounts for only 10%, Reuters news service reported. Russia stopped importing poultry from the United States earlier this year after it began enforcing a restriction on the use of chlorinated water for cleaning poultry carcasses. Use of a chlorine wash is standard in the United States.
Leatherby said that Tyson Foods is interested in discussing alternative cleaning methods with Russian authorities.
In its overall business, Leatherby said that Tyson expects to benefit from market fundamentals. With lower overall industry production levels, decreased imports, increased exports and lower cold storage inventories, according to USDA data, the availability of chicken, beef, pork and turkey in the United States appears to be declining for the second year in a row.
"This is the first time that has happened in 40 years," Leatherby said. "Although demand is down, supplies are down more, making for what should be a favorable pricing environment. Prices for corn and soybean meal—key inputs in chicken production—are expected to be favorable as well."
Leatherby said Tyson is focusing on integrating recent acquisitions in China and Brazil, further reducing its $1.9B debt after cutting it by $400M last quarter, reinvesting in its business and exploring opportunities for its renewable products group, which includes pet products, renewable fuels, biotech and nutraceuticals. The company recently reopened an idle plant and reconfigured it to produce high-end pet treats. Dynamic Fuels, Tyson's joint venture with Syntroleum Corp., is expected to bring its renewable diesel plant online this summer.
