Food Business News - May 15, 2018 - 17
Tyson invests in Israel-based
JERUSALEM, ISRAEL - Tyson Ventures, the venture capital arm of Springdale, Ark.-based Tyson
Foods, Inc., is co-leading a $2.2 million seed investment
in Future Meat Technologies. Based in Jerusalem, Future
Meat Technologies is a biotechnology company advancing a manufacturing platform for the cost-efficient
production of meat directly from animal cells, without
the need to raise or harvest animals.
Tyson Ventures is being joined in the seed investment by several groups, including: Neto Group, one of
the largest food conglomerates in Israel; S2G Ventures, a
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Chicago-based venture capital fund; BitsXBites, China's
first food technology venture capital fund; Agrinnovation, an Israeli investment fund
founded by Yissum, the Technology Transfer Company of The Hebrew University; and New
York-based HB Ventures.
Yaakov Nahmias, founder of Future Meat Technologies and chief scientist, said it may
be difficult to imagine cultured meat becoming a reality with a current production price of
about $10,000 per kg.
"We redesigned the manufacturing process until we brought it down to $800 per kg
today, with a clear roadmap to $5 to $10 per kg by 2020," he said.
Mr. Nahmias said animal fat produces the unique aroma and flavor of meat that "makes
our mouth water," and Future Meat Technologies is now the only company that can produce
this fat, without harvesting animals and without any genetic modification. FBN
said. "And despite all the conversation
about trade and tariffs, we haven't seen a
significant impact on our Beef business.
That said, trade flow is incredibly important to Tyson Foods, and we continue to
urge our political leaders to support efforts to provide certainty in the markets.
"Barring any disruptions, we anticipate the favorable operating environment
in beef to continue into 2020. The U.S.
cattle herd expansion is slowing, but there's
still ample supply of livestock, and demand
for U.S. beef continues to be robust."
Sales for the Prepared Foods business
unit rose 11% to $2,147 million and generated an operating income of $123 million
compared with $87 million during the
same period of the previous year.
"An inherent advantage in our Prepared Foods business is access to protein
from our Beef, Pork and Chicken segments," Mr. Hayes said. "We're building
on that strong foundation to upgrade our
product mix to more value-added proteins and deliver long-term, sustainable
growth. In doing so, we incurred several
one-time costs in Q2 related to certain
purchasing contracts, exiting nonprotein
businesses and expanding (plant) capacity. Even with those events, the Prepared
Foods segment delivered strong results
and is on track to deliver an operating
margin of around 11% for the year."
Additional pork processing capacity
in the United States pressured Tyson
May 15, 2018
Foods' Pork unit. Sales fell 1.1% to $1,265
million, and operating income dipped
significantly to $67 million during the
quarter from $141 million the year prior.
"We slightly reduced volume to
balance our production with customer
demand," Mr. Hayes said. "Winter weather was a challenge in our Pork segment
as well, creating staffing difficulties and
at times also preventing us from running
some of our plants.
"For the year, we believe our Pork
segment will continue to execute well.
Hog supply is expected to be up 2%
to 3%. However, there's a significant
amount of new production capacity that
has pressured margins. We're projecting
that our operating margin for the year
should be around 8%, and we expect
more hogs will be available in the fall,
which should be supportive of a strong
operating environment in pork heading
into our fiscal year 2019."
Tyson Foods income for the first six
months of fiscal 2018 was $1,948 million,
equal to $5.25 per share, and an increase
compared with the first half of fiscal 2017
when the company earned $935 million, or
$2.51 per share. The passage of tax legislation at the end of 2017 had a favorable impact on Tyson Foods' first-quarter earnings.
Sales for the first six months were
$20,002 million, an uptick compared
with the previous year when sales were
$18,265 million. FBN
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