Tyson Focused on Creating Long-Term Shareholder Value
Company aims to sell more products across distribution channels
Boston, Massachusetts – September 6, 2006 – Leveraging the size of Tyson Foods, Inc. (NYSE: TSN) by selling more products across all distribution channels is among the steps needed to create long-term value for the company’s shareholders, according to Tyson’s Chief Executive Officer.
CEO Richard L. Bond joined Tyson Chief Financial Officer Wade Miquelon in a presentation Wednesday at the Prudential Equity Group’s Annual Back-to-School Consumer Conference in Boston.
Miquelon noted the steps the company has taken in recent months to return to profitability, including the implementation of approximately $200 million in cost reductions and the consolidation of beef plants. Company officials believe more than 90% of these annual savings will be fully delivered in fiscal year 2007. However, both Miquelon and Bond also acknowledged the importance of going beyond cost savings to grow the company’s top line sales.
“I’m proud of what we’ve done so far to right the ship, but there is much more we can do,” Bond said. “To thrive, not just survive, we must respond better and faster…and we will.
Tyson is the world’s largest producer and marketer of chicken, beef and pork, and an estimated 300 million times every day people around the world enjoy Tyson products. “We’re going to leverage our scale to create long-term, sustainable shareholder value,” said Bond. “One of the ways we’re going to do that is by thinking across channels, across customers and across proteins.” Examples include the possibility of selling some new food service products to club stores or marketing a product originally developed for school cafeterias to retailers.
Bond highlighted the ongoing efforts of the company’s commodity, foodservice, consumer products and international distribution channels.
“We see ourselves as a value-added food company with a commodity base, and we think this works to our advantage because we can internalize raw materials for our further-processed products,” Bond said. For example, 70% of the company’s mix of poultry products is value-added with such items as chicken nuggets, breaded strips and hot wings.
“The commodity side of our business needs to be cost efficient and cost conscious at all times,” he added. “We recognize we compete on price in this business. We probably won’t always be the lowest price, but we need to be close.”
Tyson is the leading supplier of protein to the foodservice business. For example, Tyson products are used by thousands of schools across the country, including 95 of the 100 largest districts. The company is also one of the largest makers of pizza crusts and flour and corn tortillas in the U.S.
In an effort to remain at the forefront of product development for foodservice and other customers, Tyson is preparing to open a new research, development and training complex in early 2007 called “The Discovery Center.” This new complex at the company’s headquarters in Springdale, Arkansas, will include a building that will house 18 test kitchens. In addition, a USDA-inspected pilot plant is being built to provide a manufacturing environment for product development and new concepts to improve “speed to market.”
Product development is also a highlight of Tyson’s consumer products channel. Earlier this year the company launched 100% All Natural Marinated Fresh Chicken, which contains no artificial ingredients. Tyson has also started producing Certified Angus Beef® brand Natural beef and Star Ranch™ Natural Angus Beef for retail and foodservice customers. In addition, the company is offering consumers two new convenience driven product lines. They include Trimmed and Ready ™ fresh chicken, which is hand trimmed and ready to cook, as well as individually wrapped, boneless chicken breasts for consumers who choose to freeze some of the product for later use. This fall the company is testing a Tyson branded package for rotisserie chicken.
Tyson has also been promoting chicken and steak strips with bagged salads, since 44% of people who buy such meat items put them in salads. Tyson pre-cooked bacon also continues to increase in popularity and won the American Culinary ChefsBest™ taste award this year. It was judged the best tasting bacon in the fully-cooked category. (The ChefsBest™ Award is given to the brand rated highest overall among leading brands by independent professional chefs).
International sales remain extremely important to Tyson Foods, which sells to 80 countries around the world. According to Bond, the company is making progress on a small, strategic acquisition in China and also continues to look at the possible purchase of poultry operations in South America.
Bond also noted the recent addition of several new senior executives to Tyson Foods. New CFO Wade Miquelon joined the company three months ago after working for 16 years at The Procter & Gamble Company (P&G), where he most recently served as Finance Chief and General Manager for P&G’s Western Europe region. As part of the transition of leadership at Tyson, Miquelon now reports directly to Bond.
Rick Greubel joined Tyson in August as Group Vice President of International and will oversee all of the company’s international sales and operations. He was previously employed by Monsanto, where he was President, Managing Director and Commercial Acceptance Lead for Monsanto Brazil.
Rob DeMartini joins this month as Group Vice President, Consumer Products, overseeing operations, marketing and sales for all divisions within Tyson’s Consumer Products business, including Deli, Processed Meats, Wholesale Clubs and Retail. He comes to Tyson Foods from The Gillette Company, where he was Senior Vice President and General Manager of the company’s $2.2 billion Grooming Division.
Tyson Foods, Inc. [NYSE: TSN], founded in 1935 with headquarters in Springdale, Arkansas, is the world’s largest processor and marketer of chicken, beef, and pork, the second-largest food company in the Fortune 500 and a member of the S&P 500. The company produces a wide variety of protein-based and prepared food products, which are marketed under the “Powered by Tyson™” strategy. Tyson is the recognized market leader in the retail and foodservice markets it serves, providing products and service to customers throughout the United States and more than 80 countries. The company has approximately 110,000 Team Members employed at more than 300 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 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.
Certain information contained in the press release may constitute forward-looking statements, such as statements relating to implementing cost savings initiatives and the opening of the “Discovery Center.” These forward-looking statements are subject to a number of factors and uncertainties which could cause the company’s actual results and experiences to differ materially from the anticipated results and expectations, expressed in such forward-looking statements. The company wishes to caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. Among the factors that may cause actual results and experiences to differ from the anticipated results and expectations expressed in such forward-looking statements are the following: (i) fluctuations in the cost and availability of inputs and raw materials, such as live cattle, live swine, or feed grains, and energy; (ii) the company’s ability to realize anticipated savings from its cost reduction initiatives; (iii) market conditions for finished products, including competition from other global and domestic food processors, the supply and pricing of alternative proteins, and the demand for alternative proteins; (iv) risks associated with effectively evaluating derivatives and hedging activities; (v) access to foreign markets together with foreign economic conditions, including currency fluctuations, and import/export restrictions and foreign politics; (vi) outbreak of a livestock disease (such as avian influenza (AI) or bovine spongiform encephalopathy (BSE)) which could have an effect on livestock owned by the company, the availability of livestock for purchase by the company, consumer perception of certain protein products or the company’s ability to access certain domestic and foreign markets; (vii) successful rationalization of existing facilities, and the operating efficiencies of the facilities; (viii) changes in the availability and relative costs of labor and contract growers, and the ability of the company to maintain good relationships with employees, labor unions, contract growers and independent producers providing livestock to the company; (ix) issues related to food safety, including costs resulting from product recalls, regulatory compliance and any related claims or litigation; (x) changes in consumer preference and diets, and the company’s ability to identify and react to consumer trends; (xi) significant marketing plan changes by large customers, or the loss of one or more large customers; (xii) adverse results from litigation; (xiii) risks associated with leverage, including cost increases due to rising interest rates or changes in debt ratings or outlook; (xiv) changes in regulations and laws (both domestic and foreign), including changes in accounting standards, tax laws, environmental laws and occupational, health and safety laws; (xv) the ability of the company to make effective acquisitions and successfully integrate newly acquired businesses into existing operations; (xvi) effectiveness of advertising and marketing programs; and (xvii) the effect of, or changes in, general economic conditions.
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