Tyson is more than simply chicken. One of the largest US chicken producers, Tyson's Fresh Meats division makes it a giant in the beef and pork sectors, as well. The company also offers value-added processed and pre-cooked meats and refrigerated and frozen prepared foods (pizza crust, desserts, snacks). Its chicken operations are vertically integrated -- the company hatches the eggs, supplies contract growers with the chicks and feed, and brings them back for processing when ready. Tyson's brands include Tyson, Jimmy Dean, Hillshire Farm, Sara Lee, Ball Park, Wright, Aidells, and State Fair. Its customers include retail, wholesale, and food service companies worldwide.
Tyson processes 35 million chickens, 401,000 pigs, and 128,000 head of cattle every week at some 100 chicken, beef, pork, and prepared food production plants worldwide.
Tyson's wholly-owned subsidiary Cobb-Vantress Inc. is a top poultry breeding stock supplier globally that leverages research and development to breed desirable characteristics into its flocks.
While its chicken operations reach from egg to drumstick, Tyson raises no cattle of its own. It buys live cattle on the open market and they're raised under contract at third-party feed lots. The majority of Tyson's swine are bought from producers; however, it does raise some swine and supplies the resultant feeder pigs to independent producers on a contract basis.
As part of its operations, the company boasts four business segments: beef, chicken, prepared foods, and pork. Beef is actually its largest segment, accounting for about 40% of revenue, with chicken bringing in about 30%. The fast-growing prepared foods segment contributed nearly 20% of sales, with pork at more than 10%.
The company serves customers across the US and in about 115 countries worldwide. Tyson's major export markets include Canada, Central America, China, the European Union, Japan, Mexico, the Middle East, South Korea, and Taiwan. Export sales from the US are about $3.5 billion, or some 10% of total revenue.
Tyson has some 800 plants, mills, storage centers, and production facilities across the globe (nearly 500 of them chicken breeder houses).
Sales and Marketing
Tyson's products are marketed to grocery stores, meat distributors, club stores, military commissaries, chain restaurants, and foodservice operators, among other customers. Wal-Mart accounts for nearly 20% of Tyson's sales.
Advertising expenses for fiscal 2016, 2015, and 2014 were $238 million, $181 million, and $112 million, respectively.
Tyson had reported steady revenue growth since fiscal 2009, but sales fell 11% to $36.9 billion in fiscal 2016. Revenues declined across all four segments, but the largest drop came in the beef segment as a result of lower beef prices. The divestiture of its Mexican and Brazilian chicken operations and one less week in the fiscal year (fiscal 2015 was a 53-week fiscal year) also impacted the company's revenue.
Net income, however, continued its upward trajectory in fiscal 2016, jumping nearly 45% to a record $1.8 billion as Tyson saved some $5 billion in cost of sales, including about $2.5 billion in lower live cattle costs. Cash flow from operations benefited from the increase in net income, rising 6% to a record $2.7 billion.
Tyson's continuing focus is on what it calls the "hybrid strategy" of offering fresh meats alongside a robust portfolio of branded prepared foods. It has invested heavily in the higher-margin prepared foods category in recent years, most notably with the 2014 acquisition of Hillshire Brands, and plans to make additional acquisitions as opportunities arise.
The company realized synergies and profit improvement of $580 million in fiscal 2016 related to the Hillshire Brands integration and anticipates another $675 million in fiscal 2017. It has identified nine brands (the "core nine") it feels will drive growth in the prepared foods segment in the coming years.
In 2015 Tyson sold its Brazil and Mexico poultry operations to JBS SA for $575 million to help pay down debt associated with the Hillshire purchase.
Mergers and Acquisitions
In 2014 Tyson acquired Hillshire Brands in a $8.5 billion deal. The move catapulted Tyson to one of the top spots in the prepared foods segment and added iconic brands such as Jimmy Dean, Hillshire Farm, and Sara Lee to its portfolio.