There hasn’t been ‘a more challenging time’

Tyson Foods CEO (TSN) is doubling down on efficiency as the company faces an ongoing challenging macro environment.

The meat-processing giant announced on Monday plans to close four more facilities, following third quarter results that missed Wall Street estimates.

In an exclusive interview, Tyson Foods CEO Donnie King told Yahoo Finance that there has never been “a more challenging time” in his 40 years in the business. “The macro environment is challenging, and it’ll continue to be challenging for a bit,” King added.

Tyson plans to shutter three chicken-processing locations in October of this year, including facilities located in North Little Rock, Ark.; Noel, Mo; and Dexter, Mo. The fourth location — in Corydon, Ind. — will close on or around March 1, 2024.

The closures are part of an “efficiency play short term,” King said. He added the company is focused on “profitable growth, particularly in the value-added space,” such as chicken as well as its prepared foods division, which is a $10 billion business today.

The company expects a total charge of $300 million to $400 million from these closures, which were announced after “a lot of work and planning and preparation,” according to King.

“[The team members] will all be offered the opportunity to go to another place,” he said. “Even some of our live production, suppliers, our family farmers, … many of them will have the opportunity to get out of the business or go to work with another integrator, or they will have the option of, in some cases, producing for one of our other operations where geographically [it] makes sense.”

As of Aug. 7, there are roughly 140 food processing facilities under Tyson Foods. That’s in addition to a handful of other facilities in Asia and Europe.

Tyson Foods stock fell nearly 11% at the market open on Monday and was a top trending ticker on the Yahoo Finance platform. Shares bounced back slightly and were off by about 3.8% as of the market close.

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The stock has a long road ahead, though — shares are down nearly 40% compared to a year ago.

Tyson CEO: Sustainable growth is our plan

In Q3, Tyson Foods saw lower chicken and pork prices impact sales, while beef demand dropped. Overall sales were down 3% for the quarter.

But King is focused on the long-term outlook.

“We are seeing a few more tailwinds in parts of our businesses,” King said. “In terms of what we’re doing about all of this, our vision is delivering sustainable top-line growth and margin improvement over the long run. That’s our plan. That’s been our plan.”

A bright spot this past quarter was prepared foods, as Americans flock to frozen Jimmy Dean Biscuit Roll-ups. King said it’s the “value-added convenience” that entices consumers by “providing affordable, accessible, and sustainable foods.”

The company also updated its fiscal 2023 outlook. It now expects total sales between $53 billion and $54 billion for the full year, with sales growth flat year over year.

“Overall, we expect shares to underperform peers today, with core results in Chicken continuing to underwhelm and updated FY23 guidance implying a further downwards bias to [fiscal fourth quarter estimates],” Goldman Sachs analysts wrote in a note.

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Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected].

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