Tyson Foods President and CEO Noel White indicated that the global African swine fever (ASF) situation could lead to the export of more pork, and therefore would be good for the multi-species protein company.
So far in 2019, the World Organisation for Animal Health (OIE) has active reports on ASF cases in Romania, Moldova, Belgium, Ukraine, Chad, Poland, Latvia, Mongolia, Hungary and China, the world’s largest consumer of pork. But it has not been detected in the United States.
Speaking during a quarterly earnings call on February 7, White was asked by one analyst how he felt the ASF situation could impact the company.
“Different analysts have different outlooks as to how it could potentially impact your business,” White said. “I think the general consensus would be that it's probably a little worse than what’s reported, and that would certainly provide upward potential.”
When Tyson Foods offered its outlook for upcoming quarters in its pork segment, the company said it expected industry hog supplies to increase approximately 2 percent during fiscal year 2019, when compared to the previous fiscal year, which ended on September 29, 2018. The company further projected that it expected its adjusted operating margin will be around 6 percent for the fiscal year.
However, White added that Tyson has not built into its forecast the effects from ASF.
“But if we do see, particularly the Chinese back into the market, it could be (a) sizeable upside benefit to our pork business,” said White. “But aside from that, with that increase in exports, we consider the domestic disappearance of protein in total. If there’s more pork that's exported, it also helps both our beef and poultry businesses as well.”
Tyson Foods’ pork segment, for the first quarter of fiscal year 2019 had reported sales of $1.179 billion and an operating income of $95 million. White, in a press release, said he felt the pork segment, as well as the chicken segment, “performed well given market conditions.”
