Tyson Will Close Four Chicken Plants Next Year
Tyson Foods missed Wall Street expectations for third-quarter revenue and profit on Monday, hurt by falling chicken and pork prices as well as slowing demand for its beef products.
Shares closed down about 4% Monday after earlier falling nearly 10% as the company said it is evaluating all operations and closing four more U.S. chicken plants in the latest bid to reduce costs.
"We are looking at everything in terms of how it works across the board," CEO Donnie King told analysts on a call.
Meat companies that reaped big profits as prices soared during the COVID-19 pandemic are now adjusting to lower prices and reduced demand for some products. Pilgrim's Pride (PPC.O), one of the world's largest chicken producers, also saw sales decline from last year in the latest quarter.
Tyson has already cut corporate jobs and shuttered other chicken plants this year as it grapples with declining profits and reduced demand from consumers squeezed by inflation and higher interest rates.
"It was another challenging quarter for Tyson, as the macro backdrop remains unfavorable for commodity protein processors," said Arun Sundaram, analyst for CFRA Research.
Tyson expects the four chicken plants to stop operating in its first two quarters of fiscal 2024, with charges of $300 million to $400 million.
Last year, the company wrongly predicted demand for chicken would be strong at supermarkets in November and December, King has said. In January, Tyson replaced the president of its poultry business.
"If you look at the chicken business today versus where we were just a quarter ago, there are more tailwinds than headwinds in the chicken business in the near to long term," King said Monday.
