NEW YORK, June 4, 2008 (PRIME NEWSWIRE) -- Strategic changes over the past two years have significantly improved the cost structure of the Tyson Foods, Inc. (NYSE:TSN) beef business, the company reported today at the Stephens Inc. Spring Investment Conference in New York City. The company also continues to make progress in its efforts to convert by-products into fuel and other higher margin items.
Over the past two years Tyson has reduced its finished capacity by nearly 8,000 head per day by suspending slaughter operations at three locations in areas with low cattle availability. This includes the closure of plants at Boise, Idaho, and West Point, Nebraska, and the restructuring of operations at Emporia, Kansas.
"Reducing our beef production capacity and focusing on regions with more available cattle have made our operations more efficient," said Noel White, a senior vice president for Tyson Fresh Meats. "We've improved the balance between our capacity and available cattle. We've also succeeded in making other operational improvements in both our beef and pork plants."
Tyson's pork business has been bolstered by strong exports. The weak U.S. dollar and the price of live hogs and other inputs costs compared to other countries have worked in favor of the U.S. pork industry. The USDA projects steady growth for U.S. pork exports over the next 10 years.
Tyson's efforts to revolutionize the conversion of raw materials and by-products into high-margin initiatives currently involve four growth platforms: renewable energy, pet products, bio-tech, and nutraceuticals (nutritional supplements).
Jeff Webster, senior vice president of Tyson's Renewable Products Division, provided an update on the company's strategic alliance with ConocoPhillips to convert fat into a first-of-its-kind renewable diesel fuel. The two companies experienced a successful start-up in December 2007 and are now producing 300 to 500 barrels of renewable diesel per day.
"The progress we've made in producing renewable diesel helps animal agriculture and does not directly impact the food chain," Webster said. "We hope future decisions by Congress regarding investment incentives do not impede our company's ability to make these contributions."
Webster also discussed Tyson's participation in Dynamic Fuels, a joint venture between Syntroleum Corporation (Nasdaq:SYNM) and Tyson, to convert low grade, inedible fats and greases into renewable synthetic diesel, jet and military fuel. Dynamic Fuels has secured preliminary approval for $100 million in tax exempt Gulf Opportunity Zone (GO Zone) Bonds to fund the building of the company's first renewable synthetic fuels facility in Geismar, Louisiana.
Equipment requiring a long lead time has been ordered, process engineering for the project is completed and final cost estimates are expected this month. Construction is expected to begin in the fall of 2008 with start-up planned for the first quarter of 2010. Once in operation, the plant is expected to produce about 75 million gallons of renewable synthetic fuel annually.
Webster also talked about Tyson's partnership with other companies to produce such items as pet food products, super absorbent materials, collagen-based products and protein supplements. For example, earlier this year, Tyson and Kemin Industries, Inc. formed a strategic alliance to develop, manufacture, market and sell liquid and dry flavor-enhancers known as palatants, to the North American pet food market.
During the presentation, Noel White also noted a routine test on a flock of Tyson breeder hens in Arkansas recently indicated the presence of antibodies for H7N3 avian influenza. The 15,000 chickens involved showed no signs of illness and the situation poses no risk to human health. Even though the affected birds did not currently have the virus, they were destroyed as a precautionary measure and will not enter the human food chain.
As a result of the discovery, the U.S. has voluntarily suspended any poultry exports from Arkansas to Russia for 90 days and Japan has decided to implement a temporary ban. However, Tyson expects to continue to serve its customers in those countries by providing product from company plants in other states. Tyson officials do not believe this matter will have a material impact on the company's business.
About Tyson Foods
Tyson Foods, Inc. (NYSE:TSN), founded in 1935 with headquarters in Springdale, Arkansas, is the world's largest processor and marketer of chicken, beef, and pork, the second-largest food production company in the Fortune 500 and a member of the S&P 500. The company produces a wide variety of protein-based and prepared food products and is the recognized market leader in the retail and foodservice markets it serves. Tyson provides products and service to customers throughout the United States and more than 80 countries. The company has approximately 104,000 Team Members employed at more than 300 facilities and offices in the United States and around the world. Through its Core Values, Code of Conduct and Team Member Bill of Rights, Tyson strives to operate with integrity and trust and is committed to creating value for its shareholders, customers and Team Members. The company also strives to be faith-friendly, provide a safe work environment and serve as stewards of the animals, land and environment entrusted to it.
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Forward Looking Statements
This document includes forward-looking statements as well as historical information. These forward looking statements may include statements relating to costs, timing and production of the fuel plant, as well as expectations for future poultry exports.