Tyson's Brazil unit to boost chicken exports; mergers and acquisitions an option

 

 

US giant meat and poultry processor Tyson Foods Inc. (TSN) said Tuesday (January 27) that it aims to boost its Brazilian chicken exports in 2009.

 

"Tyson is preparing its new acquisitions to export chicken products to markets such as the European Union this year," Joster Macedo, president of Tyson in Brazil, told Dow Jones Newswires.

 

In October, Tyson, the world's largest meat processor, acquired three companies in Brazil. Tyson bought Macedo Agroindustrial in Santa Catarina state. Macedo generated revenue of 102 million Brazilian reals (US$44 million) in 2007 from domestic sales and exports. Tyson also purchased two startup companies, Avicola Itaiopolis, or Avita, in Santa Catarina state and Frangobras in Parana state.

 

Avita and Frangobras have new plants that are ready to operate but still need to be officially inspected in order to get the necessary export licenses, Macedo said.

 

By getting export licenses for all of its Brazilian plants, Tyson expects to generate between 60 percent and 70 percent of its Brazilian revenues from exports by the end of 2009, Macedo said.

 

The remainder of its revenues will come from domestic sales, he said, without giving details of the actual figures.

 

Macedo said it is difficult to know how Brazilian chicken exports will perform this year due to the economic recession. But he expects Tyson's Brazilian operation to grow easily above Brazil's Chicken Exporters Association's estimate of 5 percent export growth in 2009 versus 2008.

 

Tyson also aims to hike its Brazilian production capacity to 816,000 birds per day by 2011, Macedo said. Of the total, 176,000 birds per day will come from the Macedo Agroindustrial and 320,000 birds each per day from Avita and Frangobras.

 

Macedo, president of Tyson's Brazilian unit, wouldn't give Tyson's current Brazilian production levels. But Tyson earlier this month signed a one-year agreement with Brazilian company Globoaves to produce up to 60,000 birds per day. "This is a bridge until our own plants are ready," he said.

 

Tyson's Brazilian unit said that poultry exports will be sent to various countries depending on the product. For instance, boneless chicken breasts tend to go to the EU, while chicken wings and legs go to Asia, he said.

 

Tyson also intends to build on Macedo Agroindustrial's existing domestic chicken sales in Santa Catarina state and in the south of Brazil. The company will focus on premium products such as marinated chickens, he said.

 

Tyson sees Brazil as a key part of its international strategy, and the company is still open to make further acquisitions, according to Macedo.

 

Tyson isn't in current acquisition talks in Brazil, but the company doesn't rule out further purchases in the future, Macedo said.

 

"The company will assess how any acquisitions fit into its strategy, the price and potential synergies," he said.

 

Poultry will certainly be the first focus for acquisitions, he added.

 

Tyson on Monday (January 26) posted a global net loss of US$112 million for its fiscal first-quarter compared with net income of $34 million a year-earlier. Worldwide revenue increased 0.7 percent to US$6.52 billion.

 

Brazil is currently the world's leading chicken exporter and third largest chicken producer behind the US and China.

 

Tyson shares were last up 2.7 percent at US$9.15.