(TSN) Tyson Foods Focuses on Innovation

The global meat processor, Tyson Foods Inc. (TSN) has announced that they will focus on innovation as an important part of their growth strategy and they have an aggressive product launch scheduled ahead in fiscal 2013.

Management drew the investors’ attention to the three pillars of the company’s growth strategy, namely, accelerate, innovate and cultivate.

Tyson expects to achieve top line sales growth of 3% to 4% every year. Value added sales are expected to grow 6% to 8%, while international sales are expected to increase 12% to 16% during ?. The company also aims to maintain a bottom line growth of 10% every year.

International growth has also been given great importance. The company expects to grow its business in China, Mexico and India. Moreover, Tyson is foraying into Mexican food business with its strategic acquisition of Don Julio. This is particularly encouraging as Mexican food is gaining popularity in the U.S. processed food industry.

Tyson has many product launches in the pipeline for fiscal 2013. Its focus is mainly on hand-held, on-the-go items. The company plans to enhance its portfolio with whole-grain items and bolder flavors in this line. In the gluten-free line of items, Tyson plans to add gluten-free nuggets and other gluten-free breaded items.

Tyson has also launched NatureRaised Farms brand of chicken which are free from antibiotics. The series of new launches come at a time when the clients of Tyson, which comprise mainly of Quick Service Restaurants, mid-scale restaurants, big box retailers and club stores, small grocery chains, distributors, convenience stores, the military and schools, will be interested in new product launches amid a weakening consumer demand.

On May 6, 2013, Tyson delivered its fiscal 2013 first-quarter adjusted earnings (excluding impairment charges and currency translation gains) of 36 cents per share, missing the Zacks Consensus Estimate of 46 cents by 21.7%. Quarterly earnings also slipped significantly by 18.2% over the prior-year quarter earnings of 44 cents.

Profits declined due to margin compression in the Chicken segment due to higher feed cost, lower sales in the Beef segment as consumers opted for low-fat chicken and meat products, as well as a supply-demand imbalance in the Pork segment during the quarter. Net sales declined 1.2% to $8.4 billion in the quarter.

Tyson lowered its fiscal 2013 earnings guidance. For fiscal 2013, the company expects sales to increase to approximately $34.5 billion compared to $35.0 billion as anticipated previously. The lowering of guidance was due to the expected price increases caused by the decrease in domestic availability of protein and rising raw material costs.

Tyson currently carries a Zacks Rank #3 (Hold). Other favorable stocks in the retail and wholesale sector that are worth considering include Sanderson Farms Inc (SAFM) and Hormel Foods (HRL), holding a Zacks Rank #2 (Buy).
HORMEL FOODS CP (HRL): Free Stock Analysis Report

SANDERSON FARMS (SAFM): Free Stock Analysis Report

TYSON FOODS A (TSN): Free Stock Analysis Report

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