Tyson Foods, Inc. (NYSE:TSN)
Tyson Foods, Inc. (NYSE:TSN) does well thanks to its efforts to increase production capacity and its emphasis on protein-rich brands. The company’s retail operation continues to grow. Foodservice channel recovery also helps. The company’s e-commerce is also rising. These factors boosted Tyson Foods’ third-quarter fiscal 2022 revenue, which topped the Zacks Consensus Estimate.
However, inflationary pressures and supply chain problems still threaten the business. Let’s dive further.
What is it that Tyson Foods is Doing Right?
Tyson Foods, Inc. (NYSE:TSN) is improving its long-term operations and supply chain efficiency. The organization continues to digitize supply chain planning and execution to improve customer experience. Management optimizes its plant network by adding fully cooked capacity, converting units for value-added output, and executing plant flexibility. Last quarter, management highlighted investing in new factories and boosting global capacity.
The company has eight factories under construction, two of which will open in fiscal 2022 and six in fiscal 2023. The new capacity will help the company overcome capacity bottlenecks, boost value-added growth, and meet expanding protein demand. In fiscal 2022, management plans to invest $1.9 billion in additional capacity and automation. Tyson Foods’ strategic growth plan includes international expansion.
Tyson Foods, Inc. (NYSE:TSN) focuses on protein output to meet expanding demand. It has a growing range of protein-packed brands worldwide. The corporation has divested from non-protein companies to focus on protein-packed foods. The company has also progressively expanded its fresh prepared meals offering due to increased consumer demand for pure fresh meat without additional hormones or antibiotics.
Based on year-to-date results, management expects fiscal 2022 sales of $52-$54 billion. In fiscal 2022, the USDA expects US beef production to climb about 1%. USDA predicts Chicken production will rise by 1% in fiscal 2022. In fiscal 2022, the USDA expects beef, hog, chicken, and turkey output to be similar to fiscal 2021.
Is the Future Looking Bright For Tyson Foods?
Tyson Foods, Inc.’s (NYSE:TSN) third-quarter volume fell 1.9%. Supply constraints and a harsh macroeconomic climate hurt consumer demand. The company expects flat volume growth in 2022.
Labor, feed components, live animals, and freight expenditures rose throughout the corporation in the quarter. Tyson Foods’ quarterly gross profit was $1,611 million, down from $1,620 million last year. Gross profit as a percentage of sales fell from 13% to 11.9%.
The organization seeks to improve its cost structure, operations, and customer service. Management initiated a new productivity program in fiscal 2022 to create a better, faster, more agile organization. The company intends to save $1 billion by fiscal 2024 and $400 million in fiscal 2022 relative to a fiscal 2021 expense baseline.
The Zacks #3 (Hold) company’s shares are up 0.2% compared to the industry’s 6.9% fall.
Featured Image: Megapixl @Rafaelhenriquepress
Author Shariq Khan 