Tyson Foods has recently made the decision to close four plants due to a 3% drop in chicken revenue during the third quarter. The plants affected by the closures are located in North Little Rock, Ark.; Corydon, Ind.; Dexter, Mo.; and Noel, Mo.
According to Tyson’s CEO, Donnie King, these closures demonstrate the company’s commitment to taking bold actions and achieving operational excellence. The decision is seen as an effort to improve performance, reduce costs, increase capacity utilization, and strengthen Tyson Foods in the long term.
While Tyson recorded a 2.8% increase in sales for chicken products during the second quarter, the average prices for these products decreased by 5.5%. This decline in revenue has prompted the company to make difficult decisions regarding plant closures.
This is not the first time Tyson has closed plants. In March, the company announced the closure of two other chicken plants in Glen Allen, Va., and Van Buren, Ark. These closures, along with the recent ones, will lead to production being shifted to other facilities and will impact the affected locations over the next two quarters.
Tyson Foods anticipates incurring charges related to contract terminations, impairments, accelerated depreciation, severance, and retention due to the closures. The company expects total charges of $300 million to $400 million, which will be reflected in their financial statements.
Despite the challenging market dynamics, Tyson remains committed to achieving sustainable top-line growth and margin improvement. The U.S. Department of Agriculture projects a 3% increase in chicken production for fiscal 2023 compared to the previous year. Tyson is aiming for an adjusted operating margin of minus 1% to 1% for fiscal 2023.
Overall, Tyson Foods is focused on delivering strong performance and outpacing competitors in volume growth in their Tyson Core Business lines. The company aims to overcome market challenges and continue its growth trajectory.
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