Jim Lochner, chief operating officer of Tyson Foods has stated that Tyson’s record earnings this year should not be considered a peak, but rather what investors may expect from the company in the foreseeable future, barring any catastrophic market conditions.
“In the first nine months of fiscal 2010, we’ve had the best performance in Tyson history and expect it to remain strong,” Lochner said. “However, we don’t view this as a peak year. The fine tuning we’ve done and will continue to do on our businesses better positions us to withstand difficult market conditions and capitalise on favourable ones to achieve steadier, more sustainable earnings.”
While some have expressed concerns that increased chicken production could create an over-supply, Lochner told the conference that domestic availability of total protein should not change materially in 2011. Citing industry data, he said more chicken should be offset by less beef, while pork production is projected to be flat or down slightly. Overall protein supply appears to track below the peak of 2007-2008 and should be roughly flat compared to 2010, he said.
Donnie King, Tyson’s senior group vice president for poultry and prepared foods, reported the company has five poultry plants eligible to export to Russia and is working to have additional facilities approved. Tyson’s first load of poultry to Russia was shipped last week.
In addition to improved operational performance, Tyson has reduced its debt load significantly. The company has generated cash flows sufficient to pay down its debt by more than $900 million through the fiscal third quarter of 2010 to its lowest level since 2001. Debt-to-capital was 34% at the end of the third quarter, while net debt-to-capital (i.e., debt less cash) stood at 26%.