tyson foods to shut down four plants to cut costs, reallocate resources
Tyson Foods, which supplies beef, pork and chicken in the United States, is shutting down four processing plants in North Little Rock in Arkansas; Corydon, Indiana; Dexter, Missouri and Noel, Missouri, as a cost cutting measure.
This follows a surprise loss of $417 million in the company’s second quarter. In March, Tyson Foods announced the closure of two plants in Arkansas and Virginia, and did away with 15 percent of its senior leadership and 10 percent of its corporate workers in April.
Donnie King, Tyson President and CEO, during a Monday earnings call said the company intends to reallocate its resources to more efficient plants. “Market conditions in chicken are still challenged with commodity prices across most cuts remaining significantly lower compared to last year.”
King shared that it’s been a rough few years for Tyson on the chicken front. “We’ve had a number of fits and starts from the breeder side to demand. The facilities that we are closing are typically smaller in scale and in need of major capital to make them viable.” The executive highlighted that Tyson Foods has been around since 1935. “We always come out of trying times stronger and better, and this time is no different. We are controlling, and taking bold actions to improve performance.” King said declining overall prices hurt results this quarter, lower prices resulted from an oversupply of chicken after demand fell when Tyson and other competitors raised prices.
Ben Bienvenu, an analyst with Stephens Inc, said Tyson’s earnings was expected, and are certainly weak. He looks at the planned plant closures as a positive for the chicken segment’s performance in the long run. “We continue to believe earnings are clearly approaching a trough, and we think the stock should continue to be on the radar screen for long-term investors who can be patient.”
Moreover, the company’s international segment continues to struggle. Tyson Foods hopes better results later in the year.
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