Citing a steep drop in feed and livestock costs, executives at Tyson Foods are predicting record profits in 2016. “Fiscal 2016 is off to a very strong start in what we expect to be another record year,” says Donnie Smith, president and CEO of Tyson Foods. “Solid execution across the entire team has resulted in record earnings, record operating income, record margins and record cash flows.”
First quarter profits grew to $461 million, up 49 percent from the same time last year. Tyson raised its fiscal 2016 earnings to $3.85 to $3.95 per share, an increase from the company’s earlier estimate of $3.50 to $3.65.
Despite the company’s optimism, the projected record revenues come at a unique time for the processed meat market. According to a recent report from Research and Markets, the processed meat market in the US is projected to grow at a CAGR of 2.26 percent from 2016 to 2020.
“The US processed meat market is witnessing a strong trend toward the rise of private-label processed meat products,” according to the analysts. “Private-label meat products are being stocked at retail stores and are available at lower prices compared to branded products.”
However, the growth of the processed meat market will slow in the coming years as some consumers abandon these products in favor of perceived healthier alternatives.