YUM! (YUM), McDonald's (MCD), Tyson (TSN) at Risk from Bird Flu Fears - Fitch

April 16, 2013 11:29 AM EDT
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Protein processors and restaurants including YUM! Brands (NYSE: YUM), McDonald's Corp. (NYSE: MCD), Tyson Foods, Inc. (NYSE: TSN), and JBS S.A. are most at risk related to the recent H7N9 avian influenza or bird flu cases in China, Fitch Ratings said Tuesday.

"We believe rising consumer fears around avian influenza in China (or elsewhere if human-to-human cases develop), could cause a meaningful pullback in chicken consumption with fewer restaurant visits, lower retail chicken sales, and reduced export activity," analyst at Fitch said. "Respiratory pandemics such as the 2003 SARS epidemic and past outbreaks of animal disease or food-borne illnesses negatively affected the operating earnings and cash flow of U.S. protein processors and restaurant companies. Past outbreaks include the H1N1 swine flu virus in the U.S. during 2009 and the spread of the H5N1 bird flu through Asia during the 2003-2006 period."

A substitution towards pork as Chinese consumers reduce chicken consumption could benefit pork exporters such as Smithfield Foods, Inc. (NYSE: SFD), while providing a partial offset to diversified processors like Tyson and JBS, the firm also said.

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