• Takeover prospects `not as rich as in the past,' Smith says
  • `Worst is behind' in beef with no plans to divest, CEO says

Tyson Foods Inc., the largest U.S. meat processor, will boost product innovation and increase volumes amid an anticipated decline this year in beef and pork prices,  Chief Executive Officer Donnie Smith said.

“We will be the ones defending market share,” Smith said Tuesday in an interview at an analyst conference in Boca Raton, Florida. Meat margins will be normal to higher as sales volumes climb, he said.

Tyson’s shares have gained 52 percent in the past 12 months. On Feb. 5, the stock surged 9.9 percent after the Springdale, Arkansas-based company boosted its full-year profit forecast amid lower costs for livestock feed. Investor Dwight Anderson, the founder of New York-based commodities hedge fund Ospraie Management LLC, said in an interview with Bloomberg Television that Tyson’s “management has outperformed our expectations.”

The environment for acquisitions is “not as rich as in the past,” Smith said in the interview. Growth probably will be organic this year, while the balance sheet presents opportunities for transactions involving an attractive target, he said.

Beef Branding

Improved marketing and branding are planned for beef, the lowest-margin segment, with no divestment seen, he said.

”The worst is behind” in beef, he said.

Management has delivered record chicken profitability amid the lowest industry margins since mid-2011, Ken Zaslow, an analyst at BMO Capital Markets, said in a report on Feb. 8. The unit has shifted to “buy versus grow,” raising fewer birds and purchasing additional meat on the open market. Tyson found new ways to use lower-priced dark-chicken meat, most of which usually ends up being exported.

Tyson has expanded its higher-margin prepared-foods segment to reduce its reliance on the more volatile commodity meat business. In 2014, the company bought Hillshire Brands Co., adding products such as Jimmy Dean sausages.

The shares rose 2.7 percent to close at $61.81 on Tuesday in New York. Earlier, they reached a record $62.21.

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