Tyson Foods to shut more U.S. chicken plants after profit drops
Tyson Foods will shut down four additional chicken facilities after fiscal third-quarter sales trailed even the lowest of analyst estimates.
Production from the facilities, which are based in Arkansas, Indiana and Missouri, will be moved to other locations as the meat supplier seeks to boost capacity utilization and reduce costs, according to Chief Financial Officer John R. Tyson.
Tyson declined to provide details on the number of jobs impacted by the closures.
“It’s a difficult decision,” the executive said in an interview. “But for the long-term future of Tyson, this is the right choice to make.”
About 3,000 people work at the facilities that are slated to be shut, according to a person familiar with the matter.
It remains unclear how many positions will be cut as Tyson plans to relocate at least some of them to other plants, said the person, who spoke on the condition of anonymity because the information is private.
Net income for the three-month period ended July 1 was 15 cents per share, down 92% from a year earlier, the company said in a statement.
That compares with an analyst average estimate of 26 cents per share. Sales were down roughly 3% from a year earlier, trailing even the lowest analyst estimate.
An unusual combination of head winds including tight cattle supplies, high feed costs, and a chicken and pork supply glut sent meat producers’ profits plunging this year.
Even before Monday’s announcement, the Springdale, Ark.-based company had moved to cut corporate staff and shut two underperforming operations as part of efforts to slash costs.
“Quarter over quarter, the market conditions have not really changed materially. We recognize we’re not where we need to be,” John Tyson said in the interview.
On the flip side, the CFO said he’s really pleased with the performance of Tyson’s brands, particularly in retail.
The average price for pork fell 16.4% from a year earlier in the quarter, with prices for chicken shrinking 5.5%, the company said.
Volumes were down for both beef and pork. Tyson also wrote down a combined $448 million in its chicken and international businesses.
Tyson’s chicken losses contrast with results from Pilgrims’ Pride, which reported a better-than-expected profit for the quarter and signaled improving conditions.
Tyson shares have slumped almost 30% in the past 12 months through Friday’s close.