Tyson 'pleased' with Q1 Fresh Meats performance

by Bryan Salvage
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SPRINGDALE, ARK. – Tyson Foods was pleased with its beef and pork businesses’ first-quarter performance, said Jim Lochner, Senior Group Vice President - Fresh Meats /Beef and Pork, during a recent press briefing.

"Even though we broke even with our beef business during the first quarter, December offset a very solid October and November," he said. "December was a very challenging month as our hides, variety meats, fats and oils value corrected very dramatically during that month. However, since December we’ve had improved market conditions in the beef segment."

Demand for beef cuts such as the chuck and round as well as ground beef are still more stable, but demand for the expensive cuts of beef have been soft since the casual and upscale dining segments are still experiencing reduced service, Mr. Lochner said. "Going forward, we see continued pressure on the hides and leather business, and it will likely take some time for that to recover," he added. "But we’re also optimistic that the international variety meats demand will rebound."

Domestic demand for beef will largely depend on the overall economy, but Tyson expects to see a continued trend towards more ground beef chuck versus steak cuts, Mr. Lochner said.

"Pork had another very good quarter coming in at 6% margin despite similar challenges to beef," he added. "We felt very good about our execution and the relationship between our total costs and revenue. We will continue to focus on maximizing values for our products and minimizing our operating costs."

Although U.S. sow liquidation was less than expected, it still totaled 191,000 sows, Mr. Lochner pointed out. "This fact, coupled with reduced Canadian-born animals entering the U.S. market, will result with fewer hogs in fiscal ‘09," he added. "However, we believe there will be an adequate supply of hogs."

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