Tyson Foods Ready For Next Rebound (News Analysis)

For Tyson Foods executives, any given Monday begs the question: Where’s the courthouse?

Such is the nature of the beast when you are the biggest barnyard in the land, a.k.a. the world’s largest processor of meat. Seemingly, for every 10 people who want a piece of chicken, cow or hog, there’s a group out there that only wants a piece of you. It’s just a fact of daily business life for the Springdale company, which has more often than not come out of difficult situations stronger than ever.

On March 26, Tyson Foods was acquitted of all charges in a federal immigration trial held in Chattanooga, Tenn. For a company that has had remarkable success in the courtroom, this one may have topped them all.

But a six-week stretch from Feb. 24 to April 4 shows why thick skin, a sense of humor and deep pockets are as vital to survival at Tyson Foods as water is to a firefighter. For that matter, it’s a wonder John Tyson, Dick Bond and Greg Lee don’t don big red hats to work considering the fires they’ve faced. Tyson is the firm’s chairman and CEO. Bond is president and chief operating officer, and Lee is chief administrative officer and international division president.

A roller coaster? Heck, one with as many ups and downs as Tyson Foods wouldn’t pass safety inspections.

• Feb. 24: Tyson Foods is named America’s Most Admired Food Production Company.

• March 7: Moody’s Investors Service revises Tyson Foods’ outlook to “negative.”

• March 12: Tyson Foods’ stock drops to record-low value of $7.25 per share.

• March 14: U.S. District Court Judge R. Allan Edgar dismisses 15 more charges against Tyson Foods in a federal immigration trial. (Edgar had earlier dismissed nine other charges.)

• March 17: Credit Suisse First Boston lowers Tyson Foods’ estimates for 2003.

• March 26: Tyson Foods is acquitted of all 12 remaining charges in the federal immigration trial.

• April 4: The United States and Russia reach an agreement on safety standards for U.S. poultry, resolving a yearlong restricted ban on poultry exports to Russia.

• April 6: The Securities and Exchange Commission informs Tyson Foods that federal investigators are looking into accounting problems at Ahold’s U.S. Foodservice unit, a company with which Tyson Foods has business relations.

And this list doesn’t even cover the constant barrage of complaints from the People for the Ethical Treatment of Animals.

But give John Tyson his due. Since taking over the reins of the company three years ago, he certainly hasn’t let things go stagnant. Under his guidance, Tyson Foods went out and acquired a company twice its size and became a Fortune 100 company — $22.4 billion in revenue in 2002 — with IBP under its wings.

Is John Tyson strong? Confident? His company stood up to the United States Justice Department — and won.

“While this is something that obviously never should have been pursued in this manner by the government, we are gratified by the decision of the jury,” John Tyson said. “If you look at all we’ve accomplished within the last year in building the new company, you’ll see our people did a great job of staying focused on our business.”

Yes, Tyson Foods’ stock has suffered, dropping to a record-low per share value of $7.25 on March 12. But things have picked up. On April 10, shares had recovered a bit to $8.36 per share.

After Tyson Foods avoided huge fines with the acquittal, it learned of the new trade agreement with Russia. Also Ukraine has ended its 16-month ban on U.S. poultry exports.

Poultry industry trades with Russia were down 62 percent last year.

“We are hopeful that this agreement now signals an era of much greater stability for our poultry trade with Russia,” said USDA Undersecretary J.B. Penn.

The Russian ban was felt by other meat industries due to the surplus of supplies in the United States. Beef prices were brought down with the meat glut, too.

“Hopefully, this [agreement] will provide stability and stop the continuous interruptions,” Tyson Foods spokesman Ed Nicholson said.