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Tyson gets out checkbook

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Sandhusker

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FAYETTEVILLE, Ark. (AP) - Tyson Foods Inc., the world's largest meat producer, said Friday it plans to spend up to $650 million on capital expenditures and look into overseas acquisitions, despite a slip in earnings.

"Without a doubt, we faced our share of challenges in 2005, but we've also seen strong indicators that show our strategy is working," John Tyson told shareholders in Fayetteville for their annual meeting.

On Monday, Springdale-based Tyson said first-quarter earnings fell 19 percent to $39 million, and the company lowered its earnings guidance for 2006 to between 50 cents and 80 cents per share, down from between 95 cents and $1.25 per share.

The company reiterated its financial plans, saying it still plans to spend between $600 million and $650 million on capital expenditures.


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I have a question for the packer backers; If higher profits by the packers equate into higher cattle prices, where do the funds for capital expenditures come from? Shouldn't that extra money already be in producer's pockets?
 

Jason

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No one has ever claimed that packers give all their profits back to producers.

Tyson sees they need to diversify or update to maintain competition. The artile doesn't detail what capital expeditures Tyson plans to make, will it be some newer kill plants? Newer case ready plants? Hide plants?

I doubt $650 million is enough to buy out any competitors, and I don't know of any being up for sale.

Ranchers buy new trucks, farmers buy new tractors. Packers need to buy new equipment as well. Plants don't last forever.

The article also doesn't say how much of the $650 million will be borrowed funds.
 

agman

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Sandhusker said:
FAYETTEVILLE, Ark. (AP) - Tyson Foods Inc., the world's largest meat producer, said Friday it plans to spend up to $650 million on capital expenditures and look into overseas acquisitions, despite a slip in earnings.

"Without a doubt, we faced our share of challenges in 2005, but we've also seen strong indicators that show our strategy is working," John Tyson told shareholders in Fayetteville for their annual meeting.

On Monday, Springdale-based Tyson said first-quarter earnings fell 19 percent to $39 million, and the company lowered its earnings guidance for 2006 to between 50 cents and 80 cents per share, down from between 95 cents and $1.25 per share.

The company reiterated its financial plans, saying it still plans to spend between $600 million and $650 million on capital expenditures.


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I have a question for the packer backers; If higher profits by the packers equate into higher cattle prices, where do the funds for capital expenditures come from? Shouldn't that extra money already be in producer's pockets?

Do you think they have not made any capital expendiutres in the past five years as cattle prices advanced? Do you think they should operate as a non-profit organization? Not all long term expenditures are financed internally from cash flow. They will enter the bond market as other companies do.

The most important part of their comments I believe is that they expect to expand value-added sales by $900 million in the next year. The good news is beef will get most of that action. They fully realize the potential to add value to beef to drive sales. Adding value to beef is in its infancy compared to pork and poultry-that is good news.
 

Sandhusker

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Just trying to illustrate the rediculousness of the arguement that the more packers make, the more they pay for cattle. Obviously, there are plenty of other places profits may go. The article shows one.

Sure they may float a bond issue, but don't those have to be paid back with interest? If not from cash flow, where else are those funds going to come from? If all profits are being directed to spending more for cattle, how is the debt paid off?

Why don't some of you come clean and admit the obvious, that packers will pay as little for cattle as they can.
 

Jason

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sandblamer said:
Why don't some of you come clean and admit the obvious, that packers will pay as little for cattle as they can.

No one has ever denied that fact.

But the competition in the cattle packing industry makes them pay as much as possible for the cattle. If they leave too much on the table, another company owns the cattle.

Why do you think SH and Agman and myself tell you that higher wages for packer workers will result in lower cattle prices? Every cost a packer has will lower what they can pay for cattle. Each packer has to keep their costs consistant with their competiton to survive.

Value added increases costs but also increases revenue. If a company doesn't invest in case ready they are leaving money on the table to allow competitors to beat them with.
 

Big Muddy rancher

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Must be no such thing as competition in the gentlemanly world of banking.
They just sit around drinking Tea and eating Crumpets while deciding how much interest to charge.
 

Sandhusker

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Big Muddy rancher said:
Must be no such thing as competition in the gentlemanly world of banking.
They just sit around drinking Tea and eating Crumpets while deciding how much interest to charge.

Actually, BMR, banking is very competitive. I live in the boonies, but yet within an hours drive radius there are 8 other lenders competing with me for business. I even have to compete against the government. Compare that with the packing industry.
 
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FAYETTEVILLE, Ark. (AP) - Tyson Foods Inc., the world's largest meat producer, said Friday it plans to spend up to $650 million on capital expenditures and look into overseas acquisitions, despite a slip in earnings.
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I guess this was the part that stood out to me-- with all the Tyson- Cargill expansion in Brazil it makes me wonder if we aren't funding our own competition...

And as long as they can keep buying enough political backing to kill any type of truth in labeling like M-COOL they will have a free ride into a market the US cattlemen built.....The truly sad part is that we have so-called cattle organizations like NCBA that refuse to support USA raised beef and US cattlemen and in so doing help them to build their multinational empires.......
 

Jason

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Sandhusker what is the range of interest rates at the competing banks? Do you get beat by 8% or do you beat anyone else by 8%?

Oldtimer, make sure when you you sell any cattle that you specify Tyson never gets them to kill. I bet that will halp.
 

Big Muddy rancher

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Sandhusker"I have a question for the packer backers; If higher profits by the packers equate into higher cattle prices, where do the funds for capital expenditures come from? Shouldn't that extra money already be in producer's pockets?"


Do banks ever build new buildings? Do they aquire assets?
 

Sandhusker

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Big Muddy rancher said:
Sandhusker"I have a question for the packer backers; If higher profits by the packers equate into higher cattle prices, where do the funds for capital expenditures come from? Shouldn't that extra money already be in producer's pockets?"


Do banks ever build new buildings? Do they aquire assets?

You're not getting the intent of my post, BMR & Jason. I know what companies do with profits. It's not hard to figure out, no big mysteries there. I was simply jabbing the morons who love to try to convince us that if packers make more money, they will pay more for cattle.
 
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Sandbag: "I was simply jabbing the morons who love to try to convince us that if packers make more money, they will pay more for cattle."

The only moron is the person who believes there is no competition between the major packers for the same cattle.


Sandbag: "Just trying to illustrate the rediculousness of the arguement that the more packers make, the more they pay for cattle."

Ridiculous only to the moron who thinks packer profitability is not limited by their competition.


Sandbag: "Why don't some of you come clean and admit the obvious, that packers will pay as little for cattle as they can."

No one ever suggested otherwise. The part of the equation that you are too ignorant to understand is that the competition in the packing industry forces the lowest level of profitability. What's lost on a per head basis is made up for on volume.


Sandbag: "I have a question for the packer backers; If higher profits by the packers equate into higher cattle prices, where do the funds for capital expenditures come from? Shouldn't that extra money already be in producer's pockets?"

Did you honestly believe that packers would return 100% of their profitability to cattle prices????

I can't believe how ignorant you are sometimes especially for a banker. Of course Tyson will make a profit. DID YOU EXPECT THEM TO PROCESS CATTLE FOR FREE?????

The obvious is that their profitability will be limited by their competition.

That is the part of the "the more they make the more they pay for cattle" part of the equation that you simply cannot figure out.

You could look right at a chart that showed how live cattle prices tracked with boxed beef prices but you'd still be too damn ignorant to figure it out.

Excel, Swift, USPB, and Tyson are all competing for the same cattle. They all have packing plants that rely on an equal share of those cattle. If they didn't make a profit, THEY WOULDN'T STAY IN BUSINESS. BUT, those profits are limited by their competition. If Tyson decides they are not going to settle for less than a $30 per head profit, Swift and Excel would be more than willing to settle for $27 per head LEAVING TYSON WITH NO CATTLE TO BUY.

Why is that so difficult for a banker to figure out?

How many lending institutions passed you by before you ended up in Cody?

If you believe those "HUGE PROFITS" in the packing industry why don't you invest in a packing company????


~SH~
 

Mike

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Sandhusker said:
Big Muddy rancher said:
Sandhusker"I have a question for the packer backers; If higher profits by the packers equate into higher cattle prices, where do the funds for capital expenditures come from? Shouldn't that extra money already be in producer's pockets?"


Do banks ever build new buildings? Do they aquire assets?

You're not getting the intent of my post, BMR & Jason. I know what companies do with profits. It's not hard to figure out, no big mysteries there. I was simply jabbing the morons who love to try to convince us that if packers make more money, they will pay more for cattle.

When you have a corporation as large as Tyson who is owned by the family (a VERY large proportion), increasing the stockholder's share of profits would only raise the tax liabilities of the stockholder's. (In this case the Tyson Family)

They would personally be better served to spend profits on capital assets assumed necessary for future growth and save the money given to the guvment, thus increasing their wealth even more. Depreciable assets are worth much more than paying a higher price for "Cost of Goods".

Increasing the amount paid for cattle WOULD NOT benefit anyone within the corporate framework, except maybe a few stockholder's who happen to be cattlemen.

Make no mistake, these corps will always pay as little as they can for raw goods and will do everything within their power to keep these costs as low as possible.
 
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Mike: "Make no mistake, these corps will always pay as little as they can for raw goods and will do everything within their power to keep these costs as low as possible."

Make no mistake, these corps are in competition with other corps which forces them to pay up for cattle.

Only the packer blaming idiots can't figure that out.

If there truly was no competition in the packing industry and packers could determine their own profitability, why do cattle prices move?

PERIODS OF GENEROSITY????

SYMPATHY FOR THE FEEDERS?????

The obvious fact that prices move up and down is simply too obvious for a packer blamer to admit isn't it?


~SH~
 

Econ101

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~SH~ said:
Mike: "Make no mistake, these corps will always pay as little as they can for raw goods and will do everything within their power to keep these costs as low as possible."

Make no mistake, these corps are in competition with other corps which forces them to pay up for cattle.

Only the packer blaming idiots can't figure that out.

If there truly was no competition in the packing industry and packers could determine their own profitability, why do cattle prices move?

PERIODS OF GENEROSITY????

SYMPATHY FOR THE FEEDERS?????

The obvious fact that prices move up and down is simply too obvious for a packer blamer to admit isn't it?


~SH~

As the industry gets more and more concentrated, the packing industry gets less and less competitive. This is the obvious fact.
 
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Anonymous

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Conman: "As the industry gets more and more concentrated, the packing industry gets less and less competitive. This is the obvious fact."

No, that is not fact. That is conspiracy theory. If it was fact, you could back it with proof.

The current level of concentration and competition between the major packers has led to the highest cattle prices ever recorded which is AN OBVIOUS FACT that absolutely shatters your stupid market manipulation conspiracy theory on concentration.

Current cattle prices along with current packer concentration is the true undeniable fact!


~SH~
 

Mike

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~SH~ said:
Conman: "As the industry gets more and more concentrated, the packing industry gets less and less competitive. This is the obvious fact."

No, that is not fact. That is conspiracy theory. If it was fact, you could back it with proof.

The current level of concentration and competition between the major packers has led to the highest cattle prices ever recorded which is AN OBVIOUS FACT that absolutely shatters your stupid market manipulation conspiracy theory on concentration.

Current cattle prices along with current packer concentration is the true undeniable fact!


~SH~

But doesn't the fact that cattleman are receiving a lower percentage of retail mean something? After all, his expenses are escalating at the same rate as those in the supply chain above him. :???: :???: :???:
 
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Mike: "But doesn't the fact that cattleman are receiving a lower percentage of retail mean something? After all, his expenses are escalating at the same rate as those in the supply chain above him."


Yes, it means that retail costs have risen. wages, power, transportation, etc. etc.

Is this a mystery to you?

Are you not aware of rising fuel costs?

Do you think the packers and retailers should process and sell your product for free? A 1.5% - 2% return is too much???


~SH~
 

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