Tyson Foods plans to close four additional chicken plants as a way to cut costs as the nation’s largest meat company deals with a second consecutive quarter of declining profits, executives said Monday.
Donnie King, Tyson’s chief executive officer, said the decision puts the company in a better position for future growth. Adjusted quarterly earnings declined 92% from last year to 15 cents per share, missing analyst expectations.
While beef sales were relatively flat over last year, Tyson’s chicken, pork and prepared foods segments saw declines due to pricing challenges and slower consumer demand. Company shares dropped as much as 8% in early morning trading.
Tyson's announcement would bring the number of total plant closures this year to six.
The meat company has already been trying to cut costs over the past several months. It closed its Midwest corporate offices and shared plans in October to consolidate and move employees to its Springdale, Arkansas, headquarters. The company also sent a memo to employees in April that it would eliminate 15% of its senior leadership roles and 10% of its corporate roles, the Wall Street Journal reported.
The four affected chicken plants are located in North Little Rock, Arkansas; Corydon, Indiana; Dexter, Missouri; and Noel, Missouri. King said the company is becoming more productive with automation and worker engagement to offset capacity losses, but these types of decisions are “never easy for anyone.”
Sales came in at $13.1 billion for the quarter, down 3% from last year. Adjusted operating income was $179 million compared to $998 million a year ago, driven by sizable pork and chicken losses and partially offset by positive prepared foods results.
Consumers are dealing with inflationary pressures and increased everyday costs, slowing demand for Tyson’s products as it deals with tighter supply and production constraints. Meanwhile, higher feed and labor costs are challenging meat producers across the board.
A spring fire temporarily shuttered a Tyson pork plant in Madison, Nebraska, leading to additional setbacks and diversion costs.
Looking forward, King said the company has been through many cycles and challenges, and it always comes out “better, stronger and faster than before.”