Tyson F-odds Company Analysis CapTABLE University March 29, 2013 Samara Dingle Introduction Tyson Foods is in the Meat Product industry and consumer goods sector. They produce, distribute and market chicken, beef, pork, and prepared foods. Chicken: Tyson breeds and raise chicken along with processing chicken into fresh, frozen and value added products. They provide over 20 varieties of fresh chicken, 1 0 varieties of frozen chicken, and 50 varieties of value-added chicken products with 62 production plants. The chicken supply chain has a cycle lasting 9 months.
Beef: The beef segment has 12 operating plants and recesses cattle into primal and sub-primal meat cuts, and distributes fully cooked, value=added beef products. They are marketed to food retailers, service distributors, restaurants, and noncommercial foddering operators. They are the leader in distributing value-added beef products and satisfying customer needs. Pork: There are 9 Tyson pork production plants and processes live hogs into primal and sub-primal cuts and case-ready products. They offer a variety of pork products including fresh pork, frozen pork, and prepared/fully cooked ribs, pork sausage, and portioned cuts.
Prepared Foods: Tyson has 23 plants that specializes in prepared foods. The prepared foods segment manufactures and markets frozen/refrigerated food products including pepperoni, bacon, beef and pork pizza toppings, pizza crust, flour and corn tortillas, appetizer, prepared meals, soups, and processed meats. They operate integrated poultry production process. Just to mention some of their food items they are: canned/pouch chicken, Cornish hens, pork, Anteaters snacks, heat and eat entrees, fresh chicken and breaded chicken.
For the health conscious customers they have a better for you product that is riled and ready products. This paper will analyze Tyson Foods Corporation. It will focus on industry analysis, analyze the macro environment, macro analysis, and discuss the main regulators and describe the regulation. Industry analysis Monopoly is where there is only one firm and they are the sole seller Of a product. Tyson Foods is not a monopoly and far from it. Now if we look at oligopoly which is a market that has few large producers. This would mean that they have considerTABLE control over pricing.
They would just have to make sure or consider the effect it would have on their competitors to its own racing, output, and advertising decisions. Pure competition has large number of firms that produce a standard product. Tyson seems to fit in the pure competition category. Tyson has several different competitors that produce some of the same types of products. Some of their competitors are: Nestle, Mondale International, Inc. , Milliner, Frito-Lay North America, Inc. , Cargill, Incorporated Mars, Incorporated, Contra Foods, Inc. , Deanne, Smithfield Foods, Inc.
Tyson Food Inc. Competitors are big companies that have some or a few of the same products. Tyson Foods Inc. ‘s major competitors are Smithfield Foods Incћ Pilgrim’s Pride Corporation, and Hormone Foods Corporation. Smithfield Foods Inc. Has a $4. 06 billion market cap, and revenues of $11. 2 billion in 2010. Smithfield produces and markets fresh and packaged meat products in the United States and internationally. Smithfield mostly offers pork products to grocery chains, wholesalers, and foddering Operators. Pilgrim’s Pride Corporation has a market cap of $1. 4 billion and produces poultry products in the United States, Mexico, and Puerco Rice. Pilgrim’s Pride sells to wholesale distributors, various foddering companies, and food processors. Hormone Foods Corporation has a market cap of $7. 49 billion and specializes in perishTABLE meat products such as sausages, bacon, hams, and various other prepared/packaged foods. The advantage that Tyson Foods has I brand equity and the size oftener company. In 2010 Tyson Foods Inc. Spent$505 million in advertising and promotional activities. The marketing campaign emphasized on quality to consumers.
Tyson supplies meat products to large foddering and retail companies such as McDonald’s, Wall-Mart, and KEF, giving the easy recurring sales. They are vertically integrated in their chicken processing operations and their South American fee processing operations, which reduces their cost of production greatly. Micro environment In 2011 it was expected that Tycoon’s overall protein production increase. The exports were likely to grow and it was forecasted that domestic availability of protein should be relatively flat compared to 2010. Analysts expect decreased profit for Tyson Foods (TTS) when the company reports its first quarter results on Friday, February 1, 2013. Although Tyson reported profit of 42 cents a year ago, the consensus estimate calls for earnings per share of 38 2013). “Tyson said it experienced a decrease in fed cattle supplies of around 5% in the period. It added that, while the company’s beef segment remained profiTABLE, it was challenged by volatile market conditions and reduced demand for beef products, which made it difficult to pass along increased input costs. “(Russell, 2012).
Tyson Foods were hurt by the profit drop and the volatile market conditions. The reduced beef demand also hurt their profit. In any business when your demand for services drops it hurts your bottom line depending on how long the demand is down. The results of operations and financial conditions depend on the cost and supply of raw materials such as feed grains, live cattle, live swine, energy and ingredients as well is the selling prices for their products. Many are determined by constantly changing market forces of supply and demand over which they have limited or no control.
Because of the fluctuations in the feed ingredients that include competing demand for corn and soybean meal for use in the manufacture of renewTABLE energy, can adversely affect their earnings. Weather patterns throughout the world, the global level of supply inventories, and demand for grain and other feed ingredients, as well as agricultural and energy policies of domestic and foreign governments effect the feed ingredients. Tyson faces competition from other food producers and processors.
Some of the factors that drive demand and compete are: price, product safety and quality, brand identification, breadth and depth or product offering, availability of products and competing products, Customer service and credit terms. The demand for their products is also affected by competitors’ promotional spending, the effectiveness of advertising and marketing programs and availability or price competing protein. The increasing of demand and the prices increasing faster than inflation, the consumption has declined slightly.
Macro analysis Tyson Food Inc. As 48# debt to equity capital structure; revenue growth has been inconsistent over the past 5 years, but since 2005, revenues have increased 9. 29%. They have outperformed their sector and industry in terms of management efficiency and effectiveness to generate higher returns on invested capital, assets, and equity. They have paid uninterrupted quarterly dividends since 1977, which implies a steady cash flow, which can sustain these cash dividends. Tyson has lowered its total net debt holdings from 4. 7 billion in 2001 to $1. Billion in the first quarter of 2011, which is the lowest level of debt in 10 years. Any disruptions in Tycoon’s global credit and other financial markets of economic conditions could make it more difficult or costly for them to obtain financing for their operation or investments. They may not be TABLE to refinance their debt in the future. This could cause lender to break away from prior credit industry practice and make it more difficult or expensive. The financial conditions of some of the suppliers or customers may increase bad debt or non-performance by suppliers.
The negative impact on the global demand for protein products could result in a reduction of sales, operating income and cash flows. If there is a change in consumer preferences this could negatively impact the business. Trends, demands and preferences of the food industry in general are subject to change. Trend in the food industry often change and failure to identify and react to the change in these trends could lead to, among other things, reduced demands and price reductions for their products, and could have an advance effect on their financial results.
They could suffer significantly in sales and operating income if their customers’ plan planned/or the market changes. The impact would be great if one of the largest customers such as Wall-Mart Stores, Inc. That counts for 13. 8% of their sales in FYI 2012. The agreements that are made with their customers are short-term due to the nature of their products, industry practice and the fluctuation in the demand and price for their products. In the recent years customer have consolidated, such as supermarkets, warehouse clubs and food distributors. This is expected to continue throughout the IIS and other major markets.
This has produced large sophisticated customers that have increased buying power and are capTABLE of operating with reduced inventories, opposing price increases, and demanding lower pricing increased promotional programs and specifically allured products. The space in the customer’s stores may be used for their own private label. These trends may cause the volume to slow down or lower prices with increased promotional spending for products which would adversely affect financial results. There are some extreme factors that could negatively affect the business financially as far as pricing and cost.
Some of those extreme factors are natural disasters, fire, and extreme weather, including droughts, floods that can all impair the health and growth of the livestock or interfere with the operations. Any and all of these factors can adversely affect financial results. The global major markets include: Brazil, Canada, Central America, China, the European union, Japan, Mexico, the Middle East, Russia, South Korea, Taiwan, Ukraine, and Vietnam. Continuous research and development is done to improve product development, to automate manual processes in the processing plants. It is also done throughout operations and improve chicken feeding stock.
Main regulators “Our revolving credit facility contains affirmative and negative covenants that, among other things, may limit or restrict our ability to: create liens and encumbrances; incur debt; merge, dissolve, liquidate or consolidate; dispose f or transfer assets; change the nature of our business; engage in certain transactions with affiliates; and enter into sale/leaseback or hedging transactions, in each case, subject to certain qualifications and exceptions. In addition, we are required to maintain minimum interest expense coverage and maximum debt to capitalization ratios. Our 4. 0% Senior notes due June 2022 also contain affirmative and negative covenants that, among other things, may limit or restrict our ability to: create liens; engage in certain sale/ leaseback transactions; and engage in certain consolidations, mergers and sales of assets. ” (Tyson, 2012). The company said it bought approximately 97. 5 percent of the notes. It announced the tender offer June 6 and is funding the repurchase with a public offering of $1 billion in debt due in 2022. Shares of Tyson Foods rose 2 cents to SSL 8. 93 in afternoon trading. ” (Bloomberg Businesslike News, 2012). In 2000 Tyson Foods along with Alamo Group, Inc. And Motorola were in favor of a reverse commute concept. This concept was structured so that jobsharers who were using workforce centers in San Antonio could be screened and matched with a broader range of job openings in the outlying areas. This program would allow for workers living n the inner cities out to where the jobs are. The rides are for people that are in the program and do not have transportation in the Segueing, CA area. It is located about 30 miles east on San Antonio. Tyson has to comply with the Food and Drug Administration (FDA), compliance with these laws has not had a significant impact in Tycoon’s financial.
Tyson is subject to domestic and international laws regulating food safety, packaging, storage, distribution, and advertising/labeling. In conclusion Tyson foods seems to be doing a pretty good job. They are number three in the industry. It has been interesting learning about Tyson Foods, Inc. Founded in 1 935, Tyson Foods, Inc. And its subsidiaries (collectively, “Company,” “we,” “us” or “our”) are one of the world’s largest meat protein companies and the second-largest food production company in the Fortune 500 with one of the most recognized brand names in the food industry.
We produce, distribute and market chicken, beef, pork, prepared foods and related allied products. Our operations are conducted in four segments: Chicken, Beef, pork and Prepared Foods. Some of the key factors influencing our business are customer demand for our products; the ability to maintain and grow relationships with customers and introduce new and innovative products to the marketplace; accessibility of international markets; market prices for our products; the cost of live cattle and hogs, raw materials, grain and feed ingredients; and operating efficiencies of our 2012).
