February 21, 2008

Tyson Foods confident in further success

Press Release

Despite the impact of escalating grain prices and other market-related challenges, Tyson Foods, Inc. is strategically positioned for future success, the company's president and chief executive officer Richard L. Bond reported said at the annual Consumer Analyst Group of New York (CAGNY) Conference.  

Tyson experienced increased sales of US$1.5 billion in fiscal 2007 and generated operating income of US$700 million while incurring US$300 million in additional grain costs. The company also reduced debt by US$1.2 billion.

''We currently believe we'll experience almost US$800 million in increased grain and related input costs in fiscal 2008,'' said Bond.

Corn-based ethanol is putting pressure on input costs for the food industry and companies like Tyson. Approximately 25 percent of the US corn crop is expected to be used in 2008 to produce ethanol, compared to only 8 percent in 2002.

Tyson is working to offset the higher costs through its risk management activities and by increasing finished product prices.  The company also continues to push for changes in the government mandate on corn-based ethanol and the removal of tariffs on sugar-based ethanol imports.

He added, ''According to a recent report, even if the entire US corn crop were turned into ethanol, it would displace only 3.5 percent of gasoline use.''

Tyson continues efforts to maximize margins in its commodity businesses, according to Bond, by reducing non-value added costs, improving yields and pricing and optimizing product mix and services.  This has included such measures as consolidating some of the company's beef operations, changes in bird weight and optimizing the number of value-added breast portions from each chicken.

Bond projects Tyson's international business will grow from US$3 billion in annual sales to at least US$5 billion by 2010.  Driving this increase will be the expansion of the Tyson operations in other countries.  Tyson has completed joint ventures in Argentina and China, hopes to expand operations in Mexico and is working on a potential acquisition in Brazil.