Tyson says pork exports to China soared nearly 600% in first quarter after swine fever outbreak

Tyson Foods Inc. says it’s just starting to see the benefits of the African swine fever outbreak in China, which includes a 600% year-over-year increase in pork orders to China in the fiscal first quarter.

The meat producer says it is moving toward a ractopamine-free hog supply, which should open additional markets for its pork products. Ractopamine is a feed additive that is banned in many countries.

“In fact, global demand for all proteins is increasing as African swine fever continues to reduce pork supplies in Asia,” said Noel White, chief executive officer, on the company’s earnings call last week.

Tyson TSN, -0.61% reported fiscal first-quarter sales that missed expectations, though earnings per share beat the FactSet consensus.

Read: Burger King’s plant-based Impossible Whoper saw sales growth decelerate in the fourth quarter

Tyson also anticipates double the demand for chicken in China.

CFRA’s Arun Sundaram said a number of factors, including African swine fever, will create a tailwind for Tyson.

“Overall, we think conditions will drastically improve in the back half of the year; exports should ramp up as Tyson supplies China and backfills other countries, beef margins should remain high due to less U.S. imports of Australian beef (caused by the bush fires), China could reduce tariffs, and Tyson plans to launch more alternative protein products,” the note said.

CFRA rates Tyson stock a strong buy with a $105 12-month target.

Tyson’s plant-based Beyond Meat Inc. BYND, +1.09% competitor Raised & Rooted is now available in 7,000 stores. White said the company is planning more product launches later in the year, with nutrition and affordable pricing a major consideration for new items.

“Ultimately, we conclude that while African swine fever still will be a substantial catalyst, some of the upside is already priced in,” said JPMorgan in a note. Analysts there rate Tyson shares as neutral with an $84 price target.

In addition to earnings, Tyson Foods has disclosed in a regulatory filing that it will cut about 500 jobs, mostly from its corporate offices in Springdale, Ark. and Chicago, as part of a restructuring that was approved in the first fiscal quarter of 2020.

The restructuring will result in a $44 million pretax charge, though the meat producer does not anticipate any future charges associated with the program. Tyson also expects savings of $55 million in fiscal 2020 and $65 million in 2021.

Tyson stock has tumbled 11.5% for the year to date, but is up 31.3% over the last year. The S&P 500 index SPX, +0.55% has gained 23% over the past 12 months.

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