Tyson Foods 3Q13 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings.

“We continued to see a shift away from foodservice into retail, reflecting the overall economy.”

“We’re also seeing more bifurcation among consumers between those choosing higher-priced value-added products and those moving down the value stream to save money.”

“By separating our poultry and Prepared Foods division, we are sharpening our focus on these 2 crucial growth areas.”

“Our buy versus grow strategy continues to work for us. By keeping our production short of demand, we can make opportunistic purchases on the open market for breast meat used and value-added products, while keeping our late quarter inventories in check. We will maintain this strategy into fiscal 2014 as it allows us to be responsive to customer needs and market shifts.”

“we like the way that the chicken supply and demand fundamentals are setting up. We’ll continue to get some tailwinds from grain, moving on through our Q1 and then into Q2.”

“So if you’re a QSR, in the last couple of years, you’ve been running chicken promotions, it’s going to be really hard to comp a chicken promotion with a beef promotion. So — and that’s more likely than not, that would dominate the feature activity. So the great thing about chicken is it carries a lot of flavors, shapes and forms, and I don’t see any fatigue at all at QSR for chicken. So here’s kind of the way we think about it: So beef and pork prices ought to be pretty high, beef prices particularly, which sets up a pretty good halo in chicken, relatively speaking is a very good value when compared to those high beef prices. So we continue to think you’ll see a demand shift. In some of the numbers that we talked about, you got chicken pounds up 2% on 7% increase in pricing year-over-year. And what we saw was the beef pounds kind of struggled a little bit as they reached some pricing elasticity. Now the key thing about us in the beef and pork deal has been around where the animals are. And we’re very well positioned from a supply base around a lot of the feedlots — that are high-volume, high-capacity feedlots. So we like the way our Beef business is set up this year.”

“the tough thing about FY ’13 was the financial impact on our business. We were — about half of our production is in company-owned — or company-controlled birds now. And our cost structure in those houses is really effective. So we can’t get our land-use rights and can’t get these farms built fast enough for our taste.”

“[In China] The thing we have seen is the importance of the supply chain that we’re developing. And what we’ve seen in ’13, although it’s not been great for us financially, it has validated our business model. So we think having a supply chain that is from pullet to plate is very consistent with a lot of cost controls and a lot of bio-security controls is going to be very good for us in ’15 and beyond”

“Hope you’ll have a happy Thanksgiving. And, hey, eat some chicken, beef and pork instead of turkey this year, would you?”