Tom Hayes, Tyson Foods
Tom Hayes will formally take over as c.e.o. of Tyson Foods on Dec. 31.

SPRINGDALE, ARK. — Tom Hayes will formally take over as chief executive officer of Tyson Foods, Inc. on Dec. 31. On Dec. 7, Mr. Hayes spoke at the Sanford C. Bernstein Consumer Summit and outlined his priorities for the company going forward. They include initiatives around next stage growth in protein, a proactive approach to sustainability, innovation, and strategic investments that may involve additional acquisitions.

Yet as Mr. Hayes shifts his attention to growing the business, he also will have to defend the business against several prominent headwinds. Most notably, Tyson Foods has been named in an antitrust, chicken price fixing lawsuit, is in the midst of questions around the credibility of the  Georgia Department of Agriculture’s Georgia Dock poultry pricing report, and is responding to marketplace criticism around the company’s fourth-quarter performance, which did not live up to analyst’s expectations.

Of the price fixing lawsuit, Mr. Hayes said the company is “anxious to defend ourselves in court.”

Tyson Foods chicken
Tyson's chicken sales dropped during the fourth quarter.

“We feel like we’ve got a great position,” he said. “We’re very happy with what we do at Tyson Foods and, in no way are we going to back off of what we have been historically. What we’re going to continue to be is a fiercely competitive company that focuses on driving value for consumers and customers.”

He called the controversy surrounding the Georgia Dock prices a “tempest in a teapot” and added that only 3.5% to 4% of the company’s chicken volume is priced using the report.

Dennis Leatherby, chief financial officer, said reaction to Tyson Foods’ fourth-quarter earnings was due to confusion regarding the company Chicken and Prepared Foods business units.

Dennis Leatherby, Tyson Foods
Dennis Leatherby, c.f.o. of Tyson Foods

“Chicken, up through the first nine months of the year, had a return on sales of about 13.4%,” Mr. Leatherby said. “We said on the (third quarter) call that, for the year, we’d end up around 12%, which we did, but what we assumed the Street would do is do the math and realize that the fourth quarter would be something less than — quite a bit less than 13.4%; more like 9%, 10%. And, in fact, we came in a little bit lower than that for some of the reasons we cited around soybean meal run-up and those sorts of things. So, overall, though, it was still a great year for Chicken.

“Prepared Foods, kind of in the same vein, was running about 11% return on sales through the first nine months. We said it would end the year around 10%, which it did, but that implied that the margin for the fourth quarter would be more like 8%, and it was pretty close to that.”

In the end, Mr. Leatherby said the company could communicate better with investors in the future.

Tyson Foods prepared foods
Tyson's Prepared Foods segment ended the year with about 10% return on sales.

When asked about the market for protein and whether he is worried about a slowdown in demand, Mr. Hayes said Tyson Foods is not seeing any indicators that consumers are demanding less protein.

“We have seen quite the opposite,” he said. “Protein demand has been extremely strong. You may have seen that we just made an investment in a company called Beyond Meat, which is, certainly, plant-based protein. What we want to do is make sure wherever consumers are interested in protein, that we’re providing a solution that is great-tasting and that’s what we’ve been up to for the last several years and, certainly, within the last year.

“To point to all the growth in protein, you really have to look at the periphery, you look at all the categories that we play in, and it’s been phenomenal, the amount of the traction that these categories have had when, overall, grocery stores haven’t been doing, particularly at the center store.”

Beyond Meat products
Tyson recently invested in Beyond Meat.

Tyson Ventures L.L.C., the Chicago-based $150 million venture capital fund the company announced recently also will play a role in company growth, whether it is related to sustainability or innovation. Mr. Hayes said there are many things the company may do to become a more sustainable enterprise and added that there are some new technologies related to food waste that may help Tyson Foods.

“… Then I’d say that as it relates to new technologies, whether it’s the internet of food, production technologies, robotics, those are things that we feel that we want to make sure that we are understanding,” he said. “And that understanding could be taking minority investments in these operations that are — have these nascent technologies that could be applicable to Tyson.

“We get tons of questions and new ideas that come from all over the place, and it really, sort of, unites us to say, all right, let’s put it through one team, let’s make an assessment that leverages the process that we have and to the extent that we want to invest in them, let’s go do that.”