Tyson Foods 3Q14 Earnings Call Notes

posted in: Notes | 0

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. Full transcripts can be found at Seeking Alpha

We don’t depend on high chicken prices and low feed costs to do well

“An important report to remember about our chicken business is that we have a diversified value-added portfolio and we don’t require record chicken prices and cheap corn to do well. We use our buy versus grow strategy to take advantage of pricing when there is more chicken on the market and we do expect more supply in 2016 but we’ll need it to meet demand. Our strategy is steady growth, not a commodity roller coaster ride. With our business model we don’t view increased supply as a problem.”

Bacon demand is relatively inelastic

“As the supply of hogs tightened this past year it demonstrated the relative inelasticity of certain type of our pork bellies [ph] for bacon.’

Lower gas prices will boost consumption

“If past consumer behavior remains the same and we believe it will, the recent drop in gas prices will put more money back into consumer wallets which will result in increased meals away from home.”

Chicken demand up next year, beef supply down

“We think chicken demand will be up at least 3% next year and I would think again in ’16 because we already know that beef supply, the beef herd is going to be down another 4% which portends pretty high beef prices again into the future.’

Millenials eat a lot of chicken

“So we think that is a strong demand signal for chicken. And also there is the generational issue that we are beginning to see in the marketplace with Millennials entering the marketplace and they index quite high versus chicken and so we think that is also going to be driving consumer demand for chicken out front.”