The avian influenza outbreak of 2015 had a negative impact on Tyson Foods that amounted to about $139 million, said Donnie Smith, president and CEO of Tyson Foods.
Speaking to shareholders during the company’s quarterly earnings call on November 23, Smith said the outbreak hurt the company in two ways: the outbreak lead to the closing of several export markets for Tyson’s chicken business, and the avian influenza-related losses Tyson faced with its turkey flocks.
When Tyson completed the acquisition of Hillshire Brands in 2014, the company became a major player in the U.S. turkey industry. The company slaughtered 318 million pounds of live turkeys in 2014.
Despite those losses, Tyson Foods still completed a successful fiscal year, reporting that its net income for FY 2015 rose to $1.22 billion from the $864 million net income it reported during fiscal year 2014.
Moving forward after avian influenza
When asked how long he thought the various trade bans on U.S. poultry would remain in place, Smith said it was difficult to tell. Typically, he said, those bans will be lifted 6-9 months after the last positive detection of avian influenza, which in some regions, has already passed. “We haven’t seen many doors open, yet,” said Smith.
However, he also adds that other pending congressional actions on trade-related matters, such as the Trans-Pacific Partnership (TPP) and Country of Origin Labeling (COOL) will also play a factor.
Meanwhile, the company is rebuilding its turkey inventory, which will help the sales of Tyson’s deli meat and improve the profits of its Prepared Foods division.
“Our shortage of raw material in turkey has hurt our volume in that business,” Smith said. “Overall, the absence of turkey has hurt our volume. We’re now in a position for after the first of the year, say late January … we’ll be back to full production in our turkey operation after the [avian influenza] problems, and we’ll have the raw material around as we need.”