Tyson Foods to benefit from cheap animal feed

The company achieved higher margins and sold higher volumes in all of their categories. Sales fell 8% to the equivalent of €8 billion. The decrease is due to lower prices for meat. The poultry division of Tyson benefited from a greater reduction in costs. The chicken division is largely integrated, thus benefiting from low corn and soybean prices. The cattle and pig slaughterhouses could buy cheaper animals.

Cattle and pig populations

At the same time, the cattle and pig population in the United States has been reduced before and now see some recovery. Tyson forecasts that the number of beef cattle will increase by 1% in 2016 compared with the year before. The supply of pigs may increase 2%. The poultry production is expected to increase about 2% as well.

No clarity on Tyson’s Chinese poultry integrator

But not everything is going well. The operating margin for chicken, pork and ready-meals lie above 10%. This is limited with beef. The company also failed to book market share in Brazil and Mexico with its meat brands. It is unclear how the Chinese poultry integrator, built by Tyson in China is running.

Tyson Foods did a good job in integration the previously acquired sausage maker Hillshire Brands into the company, says CEO Donnie Smith. The company from Arkansas is now focusing on new deals. According to Smith, this will entail looking at products with high added value and expansion abroad. “96% of the global population is outside the US and food consumption is growing on a global scale,” said Smith. “We want to be positioned in such a way to be able to grow over a long period of time. This also means internationally.”