Meat processing giant
Tyson Foods Inc.
) has finally reached a settlement with the Environmental
Protection Agency ('EPA') by agreeing to pay $4 million to the
latter. The environmental safety watchdog EPA had alleged that
Tyson had violated the Clean Air Act at their processing sites.
The regulatory authority had accused Tyson over a series of
accidental chemical releases at Tyson plants in Missouri, Kansas,
Iowa and Nebraska. The EPA charged the meat giant with
non-compliance of the Clean Air Act's provisions on multiple
occasions between 2006 and 2010.
The incidents involved release of anhydrous ammonia which is used
as a refrigerant by Tyson, but exposure to which can cause
temporary blindness and eye damage, as well as irritation of the
skin, mouth, throat, respiratory tract and mucous membranes.
Inhaling the gas in high concentrations also results in lung
damage and can prove fatal in extreme cases.
Management commented that although it does not agree with many of
EPA's allegations, it admits that there was a period when Tyson
failed to meet some requirements of the EPA, as some
refrigeration improvement projects had fallen behind schedule
during that period.
The Springdale, AR-based Tyson Foods has agreed to conduct
pipe-testing and third-party audits of its ammonia refrigeration
systems so that they comply with the requirement of the Clean Air
Act. Moreover, the company has agreed to allot $3 million to buy
emergency response equipment for fire departments in its plants
located in the Midwest.
The meat processor has been accused of polluting with poisonous
anhydrous ammonia. The company has, however, sought to make up
its proven shortcomings through other types of activities, such
as the provision of nutritious meal options to school children.
Tyson has picked up on the fact that more and more Americans are
becoming conscious about obesity caused by high protein and fat
content of meat products. It has brought up tastier and healthier
lunch options for kids. Recently, the company teamed up with
Alliance for a Healthier Generation to provide affordable and
easily available food product adhering to federal nutrition
standards to school children.
In its recently concluded first quarter 2013, Tyson delivered
adjusted earnings of 48 cents per share that surpassed the Zacks
Consensus Estimate of 39 cents by 23.1%. Quarterly earnings also
increased impressively by 14.3% year over year, backed by strong
sales in chicken as well as due to operational efficiencies. It
expects overall domestic protein (chicken, beef, pork and turkey)
production will decrease by 1% in fiscal 2013 from 2012 levels
due to increased costs for cattle and hog producers owing to the
drought conditions in summer 2012 in the U.S.
For fiscal 2013, the company expects sales to increase to
approximately $35 billion, driven by anticipated price increases
as domestic availability of protein goes down and raw material
Currently, Tyson Foods carries a Zacks Rank #2 (Buy). Peer
) all carrying a Zacks Rank #2 (Buy) are currently doing quite
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