Tyson Foods’ CEO Tom Hayes sees a bright future for the company, especially after it exceeded expectations for 2017.
"We delivered well over our goals of at least four percent operating income growth, EPS growth in the high single digits and three percent volume growth in value-added products, and expect to meet or exceed these goals again in fiscal 2018," said Hayes.
In a recent CNBC interview, Hayes talked about how he believes big companies need to set the example for smaller companies when it comes to being part of the solution to “feed nine and a half billion people by 2050.”
Well, Tyson Foods is setting an example, alright!
The company has proved to be in tune with consumer trends. For example, Tyson has seen record sales for their Open Prairie Natural brand of fresh meals as they see customer demand growing double digits for No Antibiotics Ever (NAE) and no-added hormones natural fresh meats.
“Gatekeepers within the customer are asking continuously to be NAE. We're fully NAE now, and we're actually buying meat on the outside that's NAE. The cost [is] a little bit more on the upfront and we've been able to swallow that cost and then remove that cost," Hayes told analyst Farha Aslam at Stephens who asked about the reason behind the launch of NAE products.
Another trend that Tyson has invested in is alternative protein. The company bought into Beyond Meat with a five percent stake in the vegan business, surprising many as the big food company tests the waters of this fast-growing segment of the protein market.
Speaking of meat, even though Tyson’s 39 percent sales come from beef as the leading protein, the majority of the company’s sales come from leaner meat with chicken accounting for 30 percent of sales and pork accounting for 14 percent. This is a good sign for the company since there is a trend of consumers moving away from red meat.
A fourth area that is expected to grow in volumes is the prepared foods market. In the financial year 2018 the segment is expected to grow around 10 percent, boosted by the AdvancedPierre Foods deal, struck earlier this year by over four billion dollars.
Analysts covering Tyson at Morgan Stanley believe the company looks well set for a solid 12 months, writing in a note to clients on Monday: "Tyson appears well positioned to achieve another record year."