SPRINGDALE, ARK. — Tyson Foods Inc. has spent the past decade restructuring its manufacturing network, opening plants and closing older, less efficient facilities. Now the company is moving on to upgrading its logistics network. 

“We will sell multiple smaller conventional cold storage warehouses, unlocking gross proceeds in the range of $250 million to $300 million and then transition as a new anchor partner into several large-scale fully automated next-generation cold storage facilities,” said Donnie King, president and chief executive officer, during a May 5 conference call to discuss second-quarter results. “These facilities will reduce network complexity, streamline inventory flow, and simplify processes in ways that will better position us to serve our customers smarter and faster now and into the future.

“This transition will be a multiyear journey, but we believe this will generate around $200 million of annual savings at full completion, which is currently anticipated in 2030.”  

On May 1, it was announced that Tyson Foods planned to sell four cold storage warehouses in Pottsville, Pa.; Olathe, Kan.; Rochelle, Ill.; and Tolleson, Ariz., to Lineage Inc., Novi, Mich., for approximately $247 million. The two companies said they will enter into an additional agreement where Lineage will build and operate two “next generation” cold storage warehouses and Tyson Foods will be the anchor customer for the facilities.

“Today, our network is too complex and too costly,” said Brady Stewart, group president of Prepared Foods, Beef and Pork, and chief supply chain officer. “And, so, we saw an opportunity to really right size our network that allows us to continue to grow into the future but also bring cash into the enterprise as well.

“ … It’s really important to understand that there’s new cold storages that will be built, that will get our products closer to customers, which reduces the total number of miles, reduces our carbon footprint in delivering our products to our customers. And, ultimately, we’ll deliver that over $200 million in annual savings as we move out three to five years from now.”

For the quarter ended March 29, the company had net income of $7 million, equal to 2¢ per share on the common stock, and down from the second quarter of fiscal 2024 when the company earned $145 million, or 42¢ per share. Costs associated with the company’s Beef and Pork business units pressured the bottom line.

Quarterly sales were flat compared to the year before at $13 billion.

In Beef, the company’s largest business unit, quarterly sales ticked up to $5.2 billion from $5 billion the year before, but the unit recorded an operating income loss of $258 million during the quarter compared with a loss of $35 million the year before.

In a question-and-answer session with securities analysts to discuss the quarterly results, King said what the Beef unit is experiencing is “the most challenging market conditions we’ve ever seen.”

“We’re managing costs and enhancing mix or more value-added offerings,” he added. “While limited cattle availability is pressuring spreads, consumer demand has remained resilient. Our teams are executing well across procurement, production and distribution to meet customer needs and stay on track.”

Chicken business unit sales rose to $4.14 billion from $4.07 billion the year before. The business unit had an operating income of $262 million, an improvement over the year before when the operating income was $158 million.

“In Chicken, we delivered our second consecutive quarter of year-over-year volume growth contributing to a 2% increase in sales,” said Curt Calaway, chief financial officer for Tyson.

The Prepared Foods unit also performed well during the quarter. Sales ticked down to $2.39 billion from $2.4 billion, but operating income improved to $244 million compared with $230 million the year before.

“In Prepared Foods, sales were in line versus last year as higher pricing was offset by softer volume,” Calaway said. “It’s worth noting that pricing was up across retail and food away from home channels, a reflection of our effective brand portfolio and pass-through pricing.”

Pork unit sales fell to $1.2 billion from $1.48 billion in 2024. The segment posted an operating income loss of $195 million during the quarter compared with a loss of $1 million the year before. Calaway said Pork’s performance was in line versus last year, but the results were affected by the impact of “legal contingency accrual.”

Tyson Foods maintained its guidance for the quarter of sales flat to up 1% over the previous fiscal year.