Meat + Poultry - April 2006 - 36

THE REAL

WORLD
Springdale

John Tyson tells it like it is

ften, when the leaders of some
of the industry's biggest processors are asked to provide investor groups with updates on their markets
and business challenges, they tend to be
quite blunt in their assessments, cutting through the corporate smog that
can convolute a picture that isn't always
rosy. This past month, one executive
made a presentation to an audience of
banking and investment professionals
and shed some revealing light on the
challenges facing the company and the
meat industry as a whole. The comments from John Tyson, chairman and
C.E.O. of Tyson Foods, Inc., Springdale,
Ark., addressed the issues head on.
Tyson, in his address at the 2006
Stephens Inc. Consumer Conference,
pulled no punches about the current
conditions of the meat processing industry amidst animal disease threats,
protein over-supply, trade embargoes,
international competition and challenges posed by U.S. consumers. These
circumstances coupled with soaring
energy costs over the past two years
have forced most companies to focus
on efficiency, and these firms are re-

MEAT&POULTRY

April 2006

sponding to financial challenges by
wringing out every cent of their operations. Tyson is no exception.
Moving target
"We are managing the things that are
under our control, but our business is
tough - a volatile place right now,"
Tyson said. "It's the toughest I've seen
it and I've been around more years than
I can remember."
Tyson's beef business has been hamstrung by supply issues related to the
U.S. ban on Canadian cattle this past
year, while overseas import restrictions
are expected to result in double the
loss in beef compared to its fiscal first
quarter, when its beef division reported
a $64 million loss. He later added that
the company should be slightly above
the break-even point in its beef segment by the end of the year.
"It should get better in the back half
of the year as the grass gets green for
our beef and chicken segments, but it
is still tough and it is still volatile right
now," Tyson added
As the industry's largest and most
diversified processor, Tyson is espe-

www.MEATPOULTRY.com

By Joel Crews
jcrews@sosland.com

cially sensitive to the threat of highly
pathogenic avian influenza and its impact on its poultry operations, as well
as the backlash it has on the red meat
businesses.
"Of course we are watching the A.I.
situation," Tyson said. "Certainly it has
caused some slowing of demand in
some of our international export markets, and we've seen this - lower leg
quarter prices, into the $0.13 to $0.15
range. This does make our chicken
business tough too, and you've seen
several of our competitors report negative results in the poultry segment."
On the A.I.-induced surplus of
chicken, especially leg quarters in the
market, Tyson said the situation is quite
dire. "We need to get that shipped. We
need to get cleaned up. I know some in
the industry are now taking leg quarters into rendering, which is to go into
the dog food industry as a way to clean
up the number of pounds sitting on top
of the industry."
The company plans to continue focusing on the three areas it can manage:
operational efficiency, international
expansion and producing value-added

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Meat + Poultry - April 2006

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