Meat producer Tyson Foods slumps, changes CEO
Meat producer Tyson Foods increased its fiscal fourth-quarter profit despite a drop in sales, but the results fell short of expectations, and the company said it would change CEOs. The news sent the company’s stock tumbling almost 15%.
Tom Hayes, who was appointed president earlier this year, will replace Donnie Smith as CEO on Dec. 31. Smith has served in that role since 2009.
Tyson posted net income of $391 million for the period ended Oct. 1, up 51.6% from 2015’s fiscal fourth quarter. That fell short of S&P Global Market Intelligence expectations of $462 million. On a per-share basis, earnings totaled $1.03.
Sales fell 12.8% to $9.2 billion as a sweeping decline in food prices took a toll, and volume also fell. S&P analysts had projected revenue of $9.4 billion. Taken together, the developments undermined investor confidence in the company. Tyson shares closed down 14.5% to $57.59.
In a statement, Tyson Chairman John Tyson credited outgoing CEO Smith with “driving growth across our company.” Smith claimed credit for delivering growth and new products while leading “a company with a conscience.”
His exit comes as Tyson remains under pressure from animal-rights activists over its supply chain practices and faces accusations of collusion and price fixing in a class-action lawsuit that has concerned some investors.
“Donnie’s departure has nothing to do with any pending litigation,” Tyson spokesman Gary Mickelson said in a statement.
The company’s fiscal fourthquarter performance partly reflected the pricing challenges confronting food companies. Tyson’s average prices fell 5.1% in the quarter, compared with a year earlier. That included a 14.9% decline in beef pricing, as livestock availability soared, and a 3.9% decline in prepared-foods pricing.
Volume fell 8.2%, but Smith said the company is “growing where we want to grow by selling more branded, higher-margin products.”
With chicken, for example, Tyson is reducing its emphasis on commodity products and raising its emphasis on “value-added” products.