Tyson Foods Inc. of Springdale is well-positioned for growth driven by a focus on investing in new technologies, and acquisitions are a possibility, incoming CEO Tom Hayes said Wednesday at the Bernstein Consumer Summit in New York.
"One of the things I think you'll see differently from us in the future than in the past is a more proactive approach to sustainability," he said. "Be prepared for some great new products to be hitting the market ... Don't be surprised if we pull in an acquisition or two."
That strategy includes a focus on things that are attractive to both retailers and end consumers, he said.
"One of the things that we really want to make sure that we're on the front of our feet with is looking at new technologies, technologies that are going to play well with our strategy," Hayes said. Tyson recently launched a $150 million Venture Capital Fund to funnel all the innovative legwork to one team, he added.
Early in the interview-style presentation, Hayes was asked whether an acquisition would give Tyson more of an advantage in the antibiotic-free protein space.
"We're always open to acquisitions," he said, and added that Tyson is making "exceptional progress" toward its goal of making all its products free of antibiotics "important to human health" by the end of 2017.
Hayes came to Tyson Foods after the company purchased Hillshire Brands Co. of Chicago for $8.5 billion in 2014. There, he was chief supply chain officer, responsible for operations including procurement, manufacturing, food safety and quality, engineering, and logistics. Before that, he was senior vice president and chief supply chain officer for Sara Lee North America.
When questioned about the success of Tyson's Hillshire acquisition, Hayes said, "We're well-positioned, ready to do another Hillshire-sized acquisition again if it was available."
Hayes said the company's pre-tax return on investment capital is back up to 18 percent, and it was a little more than 20 percent before Hillshire was acquired.
He also said Tyson returned $1.7 billion in cash to shareholders through stock buyback and bumped its dividend by 50 percent last year and this year. It's at 90 cents for 2017, and the board has committed to an annual growth of at least 10 cents.
Hayes, already the company's president, will add the CEO title on Jan. 1. He said 2016 was a good year overall and the company expects its first quarter of the 2016-2017 fiscal year to be a "phenomenal" start.
"We see the first quarter of our fiscal year this year as being the best quarter Tyson's had in its history," Hayes said.
He said the company is seeing its beef and pork segments at above-average profit margins. The other two segments, chicken and prepared foods, are within an expected range.
Asked about a shift in consumer demand for fresh over frozen meet, Hayes called fresh meat a "huge growth driver" but said there has also been growth in frozen food.
He also described the success of the company's "Tyson Tastemakers" meal kits as "so far, so good."
Hayes also decried coverage of the Georgia Dock poultry prices. Georgia's Department of Agriculture is requiring poultry companies to submit weekly price affidavits that will be used to calculate the industry benchmark price.
The action comes as a response to an ongoing class action lawsuit against Tyson Foods and other companies that alleges price fixing since 2008.
Hayes said only 3 or 4 percent of Tyson's goods are priced that way and "it's really become sort of sensationalized to a degree. We view those [allegations] as an attack on our integrity as a company."
He said the same about the lawsuit, and noted that Tyson has a strong defense. The company has signed an affidavit saying its prices have been clear and accurate in the past and will be so into the future, Hayes said.