Tyson Foods makes investors happy
Tyson Foods' strategies have been paying off and driving business growth. Let us take a look at some of the initiatives undertaken by the company and see how it is placed for the upcoming periods. Tyson Foods actively responds to consumers increasing preference for protein-packed meat and chicken products. Notably, sales volume in the chicken segment inched up 1.6% and 4.1% during the third and fourth quarters of fiscal 2017, respectively. Encouraged by such growth, the company has undertaken several efforts to expand poultry production capacity, especially in Tennessee. Along with the chicken segment, the company's beef unit grew 0.4% and 3.3% in the past two quarters. Robust domestic demand for beef products, improved availability of cattle supply and higher exports have been the primary drivers in this segment.
Tyson Foods has been focusing on acquisitions to strengthen protein-packed portfolio. In this regard, the company's AdvancePierre buyout favorably impacted the Prepared Foods segment's performance in the last two quarters. To enrich Prepared Foods category, the company also announced the buyout of Original Philly Holdings in November 2017. Management continues to expect positive synergies from these acquisitions.
Tyson Foods has been tapping into alternative sources of protein. The company recently raised its stake in the California-based company, Beyond Meat, which specializes in plant-based burger patties, non-GMO soy, heat-and-eat meals and pea protein frozen foods. Owned by the leading cereal producer Kellogg , Beyond Meat has a wide market reach in the meat substitute market. Such initiatives strengthen Tyson Foods competitive position against firms which have substantial presence in the meat substitutes markets, such as Amazon.com and Kroger .
Tyson Foods expects its performance in fiscal 2018 to gain from business integration synergies and other cost-optimization efforts, such as the recently-introduced Financial Fitness Program. In fact, management expects net saving of nearly 200 million USD in fiscal 2018 along with synergies worth 400 million USD and 600 million USD estimated for fiscal 2019 and 2020, respectively. Such efforts are expected to offset the negative impacts of the expense burden and price volatility.