Tyson Foods continues to be optimistic about the year despite a challenging second quarter, COO James Lochner told investors at the Goldman Sachs 17th Annual Agribusiness Conference in New York.
Tyson stock was down close to 4.0 percent on Tuesday morning as the company battles declining beef value. Still, Lochner said the company has a positive outlook for the remainder of the fiscal year.
“Margins have been compressed throughout the past month as the value of beef has fallen more than the price of cattle,” Lochner said. “Historically, adjustments occur that allow for a spread between the revenue and the cattle cost. We run our plants for margin, not market share.”
Tyson’s also saw compression in its pork operation. Lochner said, however, he expects that area to improve “in the back half of the year.”
Chicken continues to perform strong. Lochner announced at the conference that Tyson would be launching a new all-natural chicken brand called NatureRaised Farms. The product will feature chickens raised without antibiotics and hormones and fed a vegetarian diet.
“Demand [for chicken] is strong, and we’re seeing signs of consumers trading from beef to chicken,” Lochner said. “Even with pricing up substantially year over year, chicken is a good value for consumers, and food service continues to promote chicken heavily.”
Tyson is looking for between 3 and 4 percent growth in top-line sales this year. Also, the company said it will aim for between 6 and 8 percent value-added sales growth.
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