MIAMI, FLA. –Tyson Foods has made significant progress in its day-to-day operations and is committed to improving its competitive position, said Dennis Leatherby, chief financial officer, while speaking at the J.P. Morgan Global High Yield & Leveraged Finance Conference on March 1.
In its first fiscal quarter, Tyson Foods set a first-quarter record of $0.42 earnings per share; posted return on sales above the normalized ranges for its Beef, Pork and Prepared Foods segments; continued the turnaround of its Chicken segment operations; generated cash from operations of nearly $550 million; bought back $64 million of its bonds; reduced net debt to under $1.9 billion, down $400 million since the end of the previous quarter; exceeded $1.5 billion in cash and restricted cash, up almost $340 million from the end of the previous quarter; and improved net debt/E.B.I.T.D.A. to 1.4x, down from 2.8x at the end of the previous quarter.
Tyson also expects to benefit from market fundamentals while improving its operations, Mr. Leatherby said. With lower overall industry production levels, decreased imports, increased exports and lower cold storage inventories, according to U.S.D.A. data, the availability of chicken, beef, pork and turkey in the U.S. appears to be declining for the second year in a row.
“This is the first time that has happened in 40 years,” Mr. Leatherby said. “Although demand is down, supplies are down more, making for what should be a favorable pricing environment. Prices for corn and soybean meal – key inputs in chicken production – are expected to be favorable as well.”
In 2010, Tyson is focusing on integrating recent acquisitions in China and Brazil, further reducing debt, reinvesting in its business and exploring opportunities for its Renewable Products Group, which includes pet products, renewable fuels, biotech and nutraceuticals, Mr. Leatherby said.
An idle plant was recently re-opened and was reconfigured to produce high-end pet treats. And Dynamic Fuels, Tyson’s joint venture with Syntroleum Corp., is expected to bring its renewable diesel plant – the first of its kind in the U.S. – online this summer.