Tyson Foods CEO Dean Banks acknowledges that the company’s chicken business is not performing as well as it should. A turnaround is expected, he said, adding “it’s going to take some time.”
Banks made those comments during a conference call with journalists on November 16, the same day the company announced the year-end results for the 2020 fiscal year. Those results showed the chicken segment had an operating income of $86 million for the fourth quarter, a slide of $4 million when compared to the previous year. For the full fiscal year, the chicken segment recorded an operating income of $122 million, a major drop from the 2019 operating income of $621 million.
The COVID-19 pandemic, along with the subsequent decline in demand from the foodservice channel, provided the company’s chicken business with some challenges, but there are also other areas that need to be addressed, Banks said.
“We owned the fact a year ago that there was a lot we needed to do to increase the operational efficiency of our business,” said Banks.
While he said he felt the company’s retail value-added portfolio performed well in 2020, he said there was a “handful of plants where the product mix was off.”
Tyson Foods had earlier targeted $200 million in operational improvments, and prior to the pandemic and other “complexities” seen in 2020, progress was being made in that area, Banks said.
“We’ve got a best-in-class team who are working every single day to get our plants running full and get our operational efficiency back where it needs to be,” he said, adding that it will be a “multi-year effort.”
Progress toward re-listing of plant
The Tyson chicken business has also been adversely hit because China halted imports from one of Tyson’s poultry plants in Springdale, Arkansas in June.
The ban was reportedly initiated after COVID-19 cases were confirmed among employees at that plant.
To date, the plant has not been relisted as eligible to export products to China, but Banks said the company is working hard to regain that eligibility.
“We’re always in conversations with governments that want to better understand the types of protections that we have in our facilities. … We’re sharing whatever evidence they want to see, relative to the performance of that plant, so we can get back to shipping out of that location,” said Banks.
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