Tyson Foods' sales benefit from strong consumer demand for protein
- Tyson Foods said net income was $394 million in the fourth quarter, up from $391 million in the same period in 2016. Sales during the quarter were $10.2 billion, an increase of nearly $1 billion, which includes its purchase of AdvancePierre Foods earlier this year, according to its most recent earnings report. Analysts had forecast $9.89 billion in revenue, according to Reuters.
- The meat processor forecast sales in its 2018 fiscal year to rise about 7% to approximately $41 billion, which excludes revenue from the Sara Lee Frozen Bakery, Kettle and Van’s businesses it is in the process of selling. The expected increase is attributed to sales of AdvancePierre brands of $1.2 billion, an increase in sales volume in its legacy businesses, and higher prices — predominantly in chicken.
- “The fourth quarter was a strong finish to another record year,” Tom Hayes, Tyson Foods’ president and chief executive officer, said in a statement. “Fiscal 2017 was a year of great change and, despite some challenges, our team remained focused on the long term by keeping consumer relevance, customer growth and shareholder value creation at the forefront."
Tyson Foods finished off the year with its business benefiting from low feed costs and strong consumer demand for protein. During the fourth quarter, Tyson Foods said sales rose in all four of its major units — beef, pork, chicken and prepared food units. Sales in its chicken operations rose 10.6% due to increased demand and incremental volume growth from the AdvancePierre acquisition. In pork, sales surged 9.1% behind strong consumption and increased exports.
“Our plan is to grow our business year after year through differentiated capabilities, deliver ongoing financial fitness through continuous improvement and sustain our company as we sustainably feed the world with the fastest growing portfolio of protein-packed brands,” Hayes said in a statement.
As shoppers look for ways to increase their protein consumption, companies such as Tyson are ideally positioned. Tyson Foods' growth is unlikely to abate anytime soon.
Hayes, who has only been CEO at Tyson Foods for about 10 months, has been active in repositioning the meat processor to not only meet the protein demand but expand its product offerings into branded and prepared foods through the AdvancePierre deal— enabling it to have a deeper foothold into consumers who are snacking more. AdvancePierre, a maker of packaged sandwiches, also will help the company generate larger and more predictable profits than its often volatile meatpacking operations.
Tyson Foods strengthened its commitment to this area Monday after it announced the purchase of Original Philly Holdings, one of the nation’s leading producers of raw and fully-cooked Philly-style sandwich steak and cheesesteak appetizer products. Original Philly complements Tyson Food's products because it works closely with the foodservice industry and has an expanding list of customer relationships in the chain and convenience store space. The cost of the acquisition was not disclosed.
We need to “continue to be in growth mode because so many companies are not growing," Hayes told Food Dive last month. “We want to certainly be able to have the right cost structure, but the future will be really focusing on growing our brands, our customer brands, and being that company that people look to and say, 'They are an ongoing, growing food company.' ”
In the statement released Monday, Hayes spent much of this comments outlining moves made by the company during the last several months in what he called "a year of great change." He noted that strong operations in its beef and pork segments helped generate "significant cash" to fuel investments in its chicken and prepared food businesses.
With Tyson Foods expecting a strong 2018, the meat company could have even more financial muscle to invest in its ever-expanding operations, keeping them even more aligned with changing consumer tastes and eating habits. Hayes told Food Dive he would focus on “bolt-on” deals, but he wouldn't rule out a larger purchase if it was a good fit for the company.
Regardless of the moves Hayes makes, things are looking up for Tyson Foods.
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