NEW YORK — Weak meat protein market dynamics have prompted Tyson Foods, Inc. to revise its fiscal 2023 guidance down and seek ways to reduce costs. During the first part of the year the company has announced plans to lay off 10% of its corporate workforce, close two poultry processing plants and, according to Donnie D. King, president and chief executive officer, they are not done.
“We’re looking at everything,” he said during a May 17 presentation at the BMO Capital Markets Global Farm to Market Conference.
He added that in the current environment Tyson Foods needs to be the “best version” of itself, and that means being operationally excellent and reducing the number of inefficient operations.
“We're looking across the enterprise to evaluate those things,” he said. “And I'm not prepared today to tell you that I've got a location, a name for anything other than what we've already said, but we have to be more efficient. I think the environment is going to require everyone to be more efficient at what you do.”
Pressuring the company is a difficult macroeconomic environment.
“This is the first time I've seen chicken, beef and pork all challenged at the same time,” he said. “And based on everybody I talked to, no one remembers a time when that's happened since we've had chicken, beef and pork. So, we're navigating that. Like every other cycle that's out there, you always come out stronger than you go in, you come out faster and more agile…”
For the second quarter ended April 1, Tyson Foods recorded a loss of $97 million, which compared unfavorably with the same quarter of the previous year when the company earned $829 million, equal to $2.34 per share on the common stock.
Quarterly sales were flat at $13.13 billion compared with $13.12 billion the year before.
In March, the company announced plans to close two poultry processing plants in Glen Allen, Va., and Van Buren, Ark.
“… With this particular move … we essentially were able to… have the same level of production but do it in two (fewer) facilities,” King said. “So, the business didn’t shrink. We just reduced the cost and eliminated some additional overheads that we had.”
As part of its guidance revision, Tyson Foods said its Beef business unit — its largest — would generate margins to be between a loss of 1% and a gain of 1% for the fiscal year. But during the BMO presentation, King noted the beef market may be nearing the bottom of its current cycle.
“… Where we are in the beef cycle, we've been talking about it now, it seems like, for about the last year or more,” he said. “But we're getting closer to the bottom of the cycle, and we feel good about that. We are seeing fewer cows harvested, which is one of the signs that we were looking for. We have seen some heifer retention, but not really in a sustained way. So, whenever we start seeing that in a meaningful way, then we'll feel comfortable that we've kind of reached the bottom on our way out.”