US – Tyson Foods, the world’s second-largest processor and marketer of chicken, beef, and pork has announced its plans to shut down four chicken processing facilities in Corydon Indiana, Dexter, Missouri, Noel, Missouri and North Little Rock, Arkansas in the US.
According to the president and CEO of the giant processor, Donnie King, the closure of the facilities demonstrates the company’s commitment to bold action and operational excellence as it drives towards performance that includes lower costs and improving capacity utilization and build on the strategy to make Tyson stronger.
However, the company expects to shift production to other facilities, with operations at the four plants slated to cease in late 2023 or by the first half of 2024.
Through the closure, the meat giant aims to optimize network asset utilization as it adjusts to a decline and slowing demand for certain products.
“We’re continuing to evaluate everything as we automate and modernize these assets. And so, we’ll continue to look,” Donnie said.
“We’re executing a multi-point plan focused on efficiency and modernisation, including taking a much closer look at our cost structure across the business to drive operational excellence.”
He described the newly announced closures, and those announced earlier in the year, as “decisive actions taking the company to successfully navigate the current market environment”.
“Market conditions in chicken are still challenged with commodity prices across most cuts remaining significantly lower, compared to last year,” he added.
In addition, citing the latest USDA cattle inventory report, King noted that the beef industry will likely continue facing headwinds amid the herd liquidation that continues to tighten supply, leading to higher cattle cost, narrowing spreads and difficult export market conditions.
He added that reduced demand for beef has also made it difficult to pass on higher costs to consumers despite steep inflation on labour, grain and other inputs.
According to the Chief financial officer John Tyson, the four facilities account for about 10% of Tyson’s chicken-slaughter capacity.
“Arkansas-based Tyson reported third-quarter sales of US$13.14bn, down 3% year-on-year, while its adjusted operating income fell by 82% to US$179m. The current quarter also included a goodwill impairment charge of US$448m,” he noted.
He anticipated fiscal 2023 revenue in a range of US$53bn to US$54bn stating that the company wll remain fully committed to its vision of delivering sustainable top-line growth and margin improvement over the long run.
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