Meat producer Tyson Foods Inc. reported revenue growth of 5.3% year over year in the fiscal fourth quarter, to Oct. 3, 2020, outpacing analysts' estimates of 2.0% growth, according to S&P Global Market Intelligence data. The revenue expansion was driven by volume growth of 11.8% in beef and 15.2% in pork, offset in part by lower achieved prices and partly flattered by there being an extra week in the fiscal fourth quarter than a year earlier.
The company identified stronger demand in retail sales while foodservice deliveries are "still in recovery" as a result of earlier COVID-19-related commercial closures.
While the company's sales in international markets declined, its exports to international markets from the U.S. have surged recently. Panjiva's data for U.S. seaborne exports shows that shipments linked to the company climbed 39.7% higher year over year in the third quarter, followed by an 80.3% rise in shipments in October.
That's largely been driven by exports of pork, which climbed 265% year over year in the third quarter and by 117% in October, though exports of poultry climbed by 147% in October while beef and other products expanded by a more modest 27.4%.
Looking ahead, and in common with other food manufacturers, as flagged in Panjiva's Nov. 15 research, the company has had to cope with pandemic-related safety issues for workers. As a result, it incurred $200 million of direct additional costs in the fiscal fourth quarter and expects to incur a further $330 million of costs in the coming quarter.
From a growth perspective, the company also belives "African swine fever continues to present potential opportunities." That may in part be a reference to exports to China, "as well as certain nations banning German pork exports, which we expect to create incremental global demand for U.S. pork," according to CEO Samuel Banks.
Exports of pork have so far been driven by sales under the phase 1 trade deal between the U.S. and China. It remains to be seen whether (a) the Trump administration will maintain that deal through the remainder of its turn or (b) whether the incoming Biden administration will look to adapt relations with China.
German pork exports had been principally directed to Europe, China and South Korea, Panjiva's global macro trade data shows, and included processed products (mostly sausage) as well as raw cuts of meat. Shipments of German pork products to Europe accounted for 74.0% of the total in 2019, while China and South Korea represented 14.9% and 5.4%, respectively.
Securing sales in Europe will likely require a full trade deal between the EU and the U.S. given the complexities surrounding trade in agricultural products both from a tariff and sanitary standards perspective. Such a deal is more likely under a Biden administration than under Trump but is still a long way off.
Tyson's exports of pork cuts so far have been dominated by Asia. Panjiva's data shows that China represented 32.9% of Tyson's pork exports after 502% year-over-year growth in the three months to Oct. 31. Outside China, 53.1% was shipped to Asia ex-China, which also increased by 65.0%, while shipments to the rest of the world — principally Latin America — expanded by 156%.
Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.