Fowl conditions hurt Tyson
Having posted a strong performance just a year before, the nation’s largest poultry, beef and pork processor,Tyson Foods Inc. , ran into some fowl conditions in fiscal 2008.
Although total annual sales rose 4.4 percent to $26.8 billion, all other financial performance measures fell significantly during the year ended Sept. 27, 2008. Full year operating income dropped to $331 million from $613 million the year before. Net income also fell to $86 million from $268 million the previous year.
“Producing the three major proteins has proven to be a strategic advantage,” said President and CEO Richard Bond. “The strong performance by our beef and pork segments supported the chicken segment as it struggled throughout the year due to low prices and high input costs. Chicken lost $91 million in the fourth quarter due to approximately $230 million in additional grain costs over the fourth quarter of 2007 and pricing that couldn’t keep pace with inputs. Our prepared foods segment also delivered a disappointing quarter due to the high and volatile cost of raw materials.”
Speaking in November, Bond noted growth in various “platform” strategy areas. These included growth within Tyson’s Renewable Products segment as well as several successful acquisitions in China, India and Brazil.Concluding his year-end comments, he noted, “ . . . While input cost volatility and pricing pressure continues in chicken, our team is making very good progress improving our chicken business, just as we improved beef and pork. We have the right business strategy and throughout the organization, we are focused on improving our execution in 2009.”
However, Bond would not be around to see that happen. He stepped down unexpectedly in January and was replaced on an interim basis by former Chairman and CEO Leland Tollett.
Addressing shareholders at Tyson’s annual meeting this February, Tollett noted that chicken values are rising and input costs are going down. Even so, he said Tyson maintains a “sense of urgency” about returning its flagship business to profitability. He added that poultry yields, labor management and plant efficiencies already are industry competitive. Meanwhile, officials continue to bolster chicken product mix, customer service and satisfaction.
In a post-meeting press conference, Tyson officials highlighted several new products for retail, foodservice and international markets. These new products include:
• Tyson Skillet Creations, a new retail frozen meal kit with less sodium than Tyson’s prior offerings and competitors’ products. Initial varieties include Asian-style Orange Chicken, Grilled Chicken Fajitas, Grilled Steak Fajitas, Grilled Chicken Tuscany and Penne and Steak Stroganoff with Noodles.
• Several new refrigerated (vacuum sealed) red meat offerings such as Braised Beef with Mild Chili Sauce and a Pork Loin in Sweet and Tangy BBQ sauce.
• New Homestyle Breaded Value Chicken Tenders, Right Size Filets, Value Meatballs and Shaved Steak Beef offerings for foodservice operators.
As of early March, Tollett was leading the executive search for an internal candidate to succeed Bond.
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