Tyson Foods Class A Earnings Call Insights: Chicken Pricing and Below Normalized Range for Beef

Tyson Foods, Inc. Class A (NYSE:TSN) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Chicken Pricing

Farha Aslam – Stephens, Inc.: So, our first question is on Chicken. You’ve just finished the foodservice contracting season. Donnie, you had highlighted that only 10% of your contracts are now fixed. Could you just share with us, how you felt about the level of pricing and flexibility you were able to get and what gives you confidence to be able to say that chicken should be in the normalized range in the second half?

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Donnie Smith – President and CEO: So, we’re pretty satisfied as we’ve come through our negotiations, not necessarily just on the foodservice side, but also at retail and pricing. It has been very important to us to continue to work down how many annual fixed price agreements we have and as of now, coming into calendar ’13, we’re at 9%, which is, if you’ll remember dramatically less than where we were say four years ago. Farha, we’ve also seen an increase in the amount of product that is so where pricing is tied to some part of the input cost. Grain based pass-throughs, those types of things, which gives us more confidence going into the year, but I’ll tell you too our service, our quality, our innovative capabilities, all of those are part of the selling story and we are getting paid for that. So, we’re pleased. Now a lot of that pricing will be coming into play during this quarter. Some of those contracts don’t roll over until 1st February, 1st March, those kinds of things. So we still have to work through that in this quarter, but that’s what gives us a bit more confidence in our back-half.

Farha Aslam – Stephens, Inc.: And then perhaps a follow-up on Beef, since your last outlook you’ve seen Cargill closed a plant, you’ve seen Japan opened up, but in your release your outlook on Beef was exactly what it was last quarter. Just could you share with us, is it conservatism that’s just keeping your outlook the same or is it something else?

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