Tyson Foods restructures, reduces management team ahead of third quarter earnings

Tyson Foods said Wednesday (Aug. 2) that Andy Callahan, president of North American Foodservice & International, and Monica McGurk, chief growth officer, are exiting the company amid restructuring around the company’s beef, pork, chicken and prepared food divisions. It is the second restructure CEO Tom Hayes has made this year after taking charge at the meat giant on Jan. 1.

“A dynamic market demands we become more agile while focusing on consumers, customers and the businesses that deliver our revenue and profit,” Hayes said in a statement. “This simple design creates individual responsibility for the performance of our segments to enable faster, better, decisions.”

The new structure to a large degree reverses the plan Hayes rolled out in February that divided the company into main divisions in terms of marketing and operations. Callahan was named president of foodservice while Sally Grimes was named president of North American Retail, with the two reporting to Hayes.

After the markets closed Wednesday, Hayes outlined a restructure that looks more like what the company used in prior years with three group presidents overseeing the specific operations of the meat proteins businesses. The new structure is as follows.
• Sally Grimes, group president of prepared foods
• Doug Ramsey, group president of poultry,
• Noel White, who was chief operating officer under the previous structure, will now be group president of the beef, pork and international businesses.

White has previous experience managing the beef and pork businesses, and also managed the poultry and prepared foods businesses.

Hayes said group presidents have been selected to lead Tyson’s segments end-to-end. Each will report directly to Hayes and be responsible for growth strategy, execution and developing talent in all product categories and customer channels that their segments serve. The changes will take effect immediately.

Other direct reports to Hayes include:
• Scott Rouse – Chief Customer Officer
• Mary Oleksiuk – Chief Human Resources Officer
• Scott Spradley – Chief Technology Officer
• David Van Bebber – General Counsel
• Dennis Leatherby – Chief Financial Officer
• Justin Whitmore – Chief Sustainability Officer

Tyson said George Chappelle, chief integration officer, will continue to lead the integration of AdvancePierre Foods but will then transition to the role of chief operations officer for prepared foods, reporting to Grimes.

The management shuffle comes ahead of Tyson Foods third quarter earnings report on Aug. 7 in which Wall Street expects lower earnings and somewhat flat revenue for the period ending June 30. Earnings consensus is $1.18 per share, down 2.5% from a year ago with revenue of $9.5 billion, up 1% from the same period last year.

Analysts note Tyson Foods witnessed lower volumes despite high demand for beef, pork and chicken. A decline in live cattle and fires early this year reduced volume growth. Sales revenue is hindered by lower selling prices and expenses ran higher amid marketing and advertising which is believed to have pressured margins.

Concerns of ontinued challenges in Tyson Foods foodservice division could be the catalyst for the new structure that puts top management back in charge of its core businesses. The prepared food division, which has been challenged in recent quarters, is also getting its own leadership to focus on improving that segment.

Demand has been good for meat, but excess supplies kept prices at bay, with the exception of pork bellies and chicken wings which seem to be bucking that trend. Tyson Foods continues to integrate the AdvancePierre Foods acquisition but is facing headwinds in its retail grocery business which had been growing. Analysts said as retailers continue to battle for customers by lowering prices, margins are shrinking.

For the past 52 weeks, Tyson Foods shares have ranged in price from a high $77.05 to a low $55.72. The consensus target price for Tyson Foods is $69.33. The shares (NYSE: TSN) closed Wednesday at $63.63, up 73 cents.