Meat&Poultry - June 2012 - 32

Three-pronged approach
BY STEVE KAY
meatpoultry@sosland.com

yson Foods must like doing things in threes. For years sole-

the release and on a call with fi nancial analysts, Smith said Tyson has the potential to earn $2 per share in fiscal 2012 if it executes as planned. Eight days later, Smith outlined Tyson’s new three-pronged growth strategy, “Accelerate, Innovate, Cultivate,” at the BMO Capital Markets 2012 Farm-to-Market Conference. His presentation also stressed Tyson’s fi nancial fundamentals of a strong balance sheet and capital structure, as well as its stable earnings over several years. Tyson will accelerate growt h through its international businesses and will grow its value-added product sales domestically, Smith said. Tyson will innovate through products, processes and analytics, and it will cultivate its team members through practical

One of Tyson’s primary strategic themes is to accelerate growth in its international and value-added businesses, Smith said. Tyson will aggressively grow value-added chicken and its Prepared Foods market share in under-penetrated channels. These include convenience stores, drug stores, dollar stores, regional chains, delis, schools and retail. It will also complete the transition from and sell out its dry sausage capacity, he said. Internationally, its growth platform includes: concentrating in-country production in China, Brazil, Mexico and India; accelerating in-country growth by strengthening relationships with quick-service restaurant and retail customers; innovating against locally-identified, country-specific consumer needs by leveraging US expertise; building a scalable supply chain to ensure quality and food safety; cultivating team member development, with an emphasis on building in-country management teams. To this end, Tyson announced May 16 it had appointed Arex Lee as CEO of Tyson Foods’ China operations. Lee is a native of Taiwan and worked for more than 25 years with a leading poultry company in China in all areas of the business before joining Tyson. Tyson has had a business presence in China since 2001 and now aims to ramp up its chicken production there to produce 3 million birds per week, versus 2 million now. In addition, it

ly a poultry company, Tyson startled the meat world in 2001 with its acquisition of red meat giant IBP. This gave Tyson chicken, beef and pork in its portfolio, a multi-protein approach that has worked in its favor for the past 11 years. The approach helped Tyson produce better-than-expected results in its fiscal 2012 second quarter. Net income was $166 million, or $0.44 per share, versus $159 million or $0.42 a year earlier. Total sales were $8.268 billion versus $8.000 billion. Sales volumes were down 4.3 percent but average selling prices were up 7.7 percent. Significantly, Tyson’s chicken results

One of Tyson’s primary strategic themes is to accelerate growth in its international and valueadded businesses.
returned to their normalized range after being well below the range. This outweighed a marginal loss in its beef business and a 21.2 percent year-onyear decline in pork earnings. Tyson’s multi-protein business again proved advantageous in the quarter, said President and CEO Donnie Smith in a press release. Both in

talent development programs, he said. The strategy is built on a foundation of managing business fundamentals and on a strong capital structure, Smith said. Tyson’s balance sheet gives the company flexibility to build or buy assets to fi ll product offering gaps while continuing to invest in its existing infrastructure, he said. Smith noted that Tyson has gone from a net debt to capital ratio of about 55 percent at the start of fiscal 2002 to 20.5 percent at the end of fiscal 2011. This has put Tyson in a better position to capitalize on changing protein fundamentals, even in times of challenging market dynamics, he said.

• Meat&Poultry • June 2012 • www.MeatPoultry.com

http://www.MeatPoultry.com

Meat&Poultry - June 2012

Table of Contents for the Digital Edition of Meat&Poultry - June 2012