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Margins Improve as Tyson Foods returns to profitability

by 5m Editor
2 March 2007, at 8:33am

US - Efforts to return Tyson Foods to profitability are "paying off," senior executives told shareholders at this week's annual meeting.

"We’ve taken steps in the right direction and our business is getting back on track," said Chairman John Tyson. "I think Tyson Team Members are excited about all the work they’ve been doing to bring the company back to profitability…their hard work is paying off."

After losses in three consecutive quarters, Tyson this week reported $57 million in net earnings or $0.16 diluted earnings per share for the first quarter of fiscal 2006.

"It was the best quarter we’ve had since the fourth quarter of fiscal 2005 and it’s the result of an overall strengthening in all our core businesses as well as a focus on controlling costs," said Wade Miquelon, Tyson’s chief financial officer. The company currently expects to remain profitable, estimating diluted earnings per share for fiscal 2007 in the range of $0.50 to $0.80.

Tyson President and CEO Richard L. Bond attributes some of the company's progress to Team Member efforts to institute a $200 million Cost Management Initiative. "We have implemented those measures and they are already showing up on the bottom line," he said.

Bond also described other measures the company is taking to remain profitable. He noted Tyson managers are working in several cross-functional teams as part of the "Powering Profitability through Performance" initiative, also known as "P3." This effort focuses on the following areas:
  • Demand creation – This involves a renewed approach to product innovation and consumer insight. This process is also bolstered by the recent opening of the Discovery Center, Tyson’s new product research and development complex.
  • Price optimization – More than raising prices, this initiative entails driving value and value creation with customers.
  • Supply chain optimization – This effort involves such things as streamlining operations and the number of stock keeping units.
  • Performance-based alignment – Re-energizing Team Members and the culture of the company is extremely important to the company's future success.
"P3 will help us execute our long-term strategy to create more value-added products, improve operational efficiencies and expand our international business," Bond said.

5m Editor