Home » Tyson Foods CEO Donnie Smith’s Commentary on Q4 2013 Earnings Results [Full Text]

Tyson Foods CEO Donnie Smith’s Commentary on Q4 2013 Earnings Results [Full Text]

I’ve just said a lot about growth and strategy in the future, but I’d like to give you some specific examples that illustrate how we are executing on these broad concepts. We study consumers’ needs and behaviors and we’ve identified opportunities to grow retail value-added sales beyond center-of-the-plate chicken.

Breakfast emerged as a high potential category. Wright Brand breakfast sausage is a natural follower to Wright Bacon and a category that makes perfect sense for us as the leading pork processor. We recently rolled out Wright sausage, starting in the Southeast where Wright Bacon has the strongest following and we’re supporting this premium product line with highly targeted medium. Another breakfast category frozen handheld is also a good fit for us. At nearly a $1 billion in annual sales, it’s a large category that grew more than 20% over the last year.

Consumers told us they think the good breakfast should include protein. And Tyson is the brand they trust to deliver high quality protein. 48% of consumers who buy frozen breakfast items also buy Tyson Frozen value-added chicken. So, we have a base of familiarity and positive perceptions as we enter this new era.

We are launching seven products under the Tyson Day Starts brand that will include biscuit sandwiches, flat breads and wrapped omelettes. After consumer taste testing, 93% of consumers who already buy in this category said that they would buy Tyson Day Starts and 89% said our products were better than anything currently on the market. Sale is underway now and we’ve received a great response from our customers.

We’ll begin shipping in January and we’ll support our entry into this category with significant MAP spending. Day starts is a great example of our push for innovation as we set a goal to have 20% of our domestic poultry and prepared food sales coming from new product innovation. We define that as something that we’ve developed within the past three years and in 2013 we exceeded our goal with 21.5% of our sales resulting from innovation.

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Turning to another growth area – international. This time last year, projections for improvement in our international performance would be around $80 million but due to Avian influence in China and a weak fourth quarter in Mexico, we improved only 45 million. I will quickly add that I am still confident in our business plans in China, Brazil, Mexico and India and believe that we are headed in the right direction for long-term success.

I would like to give you an indication of what to expect from Tyson in 2014. First on the list is paying off the $458 million in convertible notes, which we did in early October in cash. It should be another very good year of growth and we are off to a strong start, especially in the chicken segment.

On our last call, we said, overall 2014 would look a lot like to back half of 2013 times two. We still see it that way, meaning we should over-deliver on our EPS growth goal of at least 10% a year and like 2013, we think earnings will be more weighted to the third and fourth quarters.

As a reminder, our other annual goals of 3% to 4% top-line sales growth, 6% to 8% value-added sales growth and 12% to 16% international sales growth. We expect an ROIC that continues to grow and drive shareholder value. With AI and China hopefully behind us, our plan is to reach breakeven profitability in processing almost a 100% company-controlled birds by the end of the fiscal year.

As I just explained, we will roll out several major product launches, including Tyson Day Starts and Wright Brand breakfast sausage. We’ll stay focused on our strategy, investing in growth and setting ourselves up for a great 2015 and beyond”.


About Tyson Foods, Inc.

Tyson Foods, Inc., with headquarters in Springdale, Arkansas, is one of the world’s largest processors and marketers of chicken, beef and pork, the second-largest food production company in the Fortune 500 and a member of the S&P 500. The Company was founded in 1935 by John W. Tyson, whose family has continued to be involved with son Don Tyson leading the company for many years and grandson John H. Tyson serving as the current Chairman of the Board of Directors. Tyson Foods produces a wide variety of protein-based and prepared food products and is the recognized market leader in the retail and foodservice markets it serves. The Company provides products and services to customers throughout the United States and approximately 130 countries. It has approximately 115,000 Team Members employed at more than 400 facilities and offices in the United States and around the world. Through its Core Values, Code of Conduct and Team Member Bill of Rights, Tyson Foods strives to operate with integrity and trust and is committed to creating value for its shareholders, customers and Team Members. The Company also strives to be faith-friendly, provide a safe work environment and serve as stewards of the animals, land and environment entrusted to it.

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