Food Business News - February 11, 2014 - (Page 18)

Inside Tyson Foods' prepared foods strategy Company expects recent investments and acquisitions to pay off during the coming year SPRINGDALE, ARK. - A trio of tack-on acquisitions in the past year has positioned Tyson Foods, Inc. to grow its prepared foods business. While operating income for the segment dropped by more than 50% during the company's first quarter, Tyson said it expects improved results for the coming year and beyond. "If you just look forward into our vision in prepared foods, continue to think about a broad portfolio of items that meet changing consumer requirements," said Donnie Smith, president and chief executive officer, during a Jan. 31 earnings call with analysts. "We've got very broad capabilities. We've got access to raw materials. Obviously, we've got a great sound capital structure and the ability to invest in those businesses, and we will continue to do that. And you should expect to see strong growth in prepared foods." Tyson's recent string of prepared foods purchases began in February 2013 when the company acquired Don Julio Foods, a Utah-based tortilla and snacks manufacturer. Tyson Foods then purchased Circle Foods L.L.C., a San Diego-based maker of frozen and refrigerated handheld Mexican foods, uncooked tortillas and Indian flatbreads under Nuevo Grille, Tortillaland and Rotiland brands the following June. In January 2014, Tyson topped its portfolio with the acquisition of Bosco's Pizza Co., a Warren, Mich., manufacturer of partially baked frozen pizza made with traditional and whole grain crusts, pizza sticks that fillings sauces feature a variety of fillings and pizza sauces. "Bosco's is a great fit with our pizza toppings, and it aligns nicely with our K-12 school food service business," Mr. Smith said. "We have to look at a variety of options and avenues for growth." Additional investments in the prepared foods segment recently have included rebuilding the lunchmeat business and rolling out new value-added products, such as the Day Starts frozen breakfast line, which launched in January. "We're investing a lot in this business," Mr. Smith said. "I view prepared foods a lot like where we were with chicken four or five years ago, where we just had to get in the basics and build a strong foundation under that business. You can see kind of the results, two, three, four years later about doing all of that work." The uncompromising consumer Mr. Smith said the company must be nimble to navigate the evolving consumer landscape. "Consumers today are expanding their food purchases beyond the traditional food service and retail channels, creating opportunities for us in dollar, convenience, drugstores and even on-line," he said. As consumer confidence rebounds, he added, shoppers are becoming less Beef, chicken drive gains for Tyson SPRINGDALE, ARK. - Higher chicken and beef sales and operational improvements contributed to a solid first quarter for Tyson Foods, Inc. For the quarter ended Dec. 28, 2013, net income attributable to Tyson Foods increased 47% to $254 million, equal to 76c per share on the common stock, up from $173 million, or 50c per share, during the same quarter of the previous yea year. Sales for the quarter rose 4.7% to $8,761 million from $8,366 million during the prior-year period. Operating income for the chicken segment soared to $225 million, up 51% from $111 million last year, driven by increased sales volume, operational improvements and lower feed ingredient costs that offset losses in international operations and a decreased % average sales price. Sales for the segment increased 2% ear to $2,981 million from $2,920 million during the prior-year period. For the beef segment, demand drove higher sales p volumes to lift operating income to $58 million, up 26% proved from $46 million last year, which also reflected improved 18 FOODBUSINESS NEWS ® op operational execution, less volatility in live cattle markets and improved export markets and partially offset increased operating costs. Sales of beef climbed 7% to $3,734 million from $3,485 million in the first q quarter of last year. Operating income for the pork segment slipped 3.2% t to $121 million from $125 million on decreased sales v vol volumes as a result of supply-and-demand imbalance from increased consumer demand and reduced exports. from Av ver Average sales price increased with mix changes and lower total hog supplies, nudging sales up 4.5% to $1,424 miltotal lion f n from $1,363 million. P Prepared foods income dropped 52% to $16 million fro $33 million, despite increases in sales volumes and from av average sales prices, as Tyson incurred higher raw mat terial and other input costs, as well as costs associated w investments in its lunchmeat business and growth with p platforms. Improved demand and incremental volumes from acquisition drove sales up 7.8% to $907 million from $841 milacquisitions lion last year. FBN February 11, 2014

Table of Contents for the Digital Edition of Food Business News - February 11, 2014

Food Business News - February 11, 2014
Post to buy PowerBar from Nestle
Beverage ingredients in the spotlight
Beef prices are red hot
Table of Contents
Web Contents
Editorial - Cause marketing gaining momentum
Green Mountain, Coca-Cola form partnership
McDonald’s is learning less is more
F.D.A. proposes sanitary food transportation rule
Price increase still planned for Chipotle
Inside Tyson Foods’ prepared foods strategy
Beef, chicken drive gains for Tyson
Meat costs will hinder Hillshire in second half
Meijer to build dairy facility in Ohio
Hershey seeks to set new bar in spreads
Washington - Putting the new farm bill in focus
Health and Wellness - Digesting the additional benefits of gut health
Are designer fibers on the horizon?
Ingredient Innovations - Making cereal more satisfying
More satiety strategies
Beverage Business News - Beverage ingredients in the spotlight
New Food Products
Ingredient Market Trends - Weather woes continue to affect markets
Ingredient Markets
Supplier Innovations and News
Ad Index
Food Business in the News

Food Business News - February 11, 2014