As fiscal 2017 winds to a close for Springdale-based Tyson Foods, the meat giant is again cutting corporate jobs as part of a stated goal to have a leaner operation while focusing on growing profits.
Tyson Foods corporate layoff rumors have swirled in Northwest Arkansas for several months with company officials declining to comment. But on Thursday (Sept. 28), Tyson Foods confirmed plans to reduce headcount by roughly 450 positions across several areas and at various job levels.
Tyson Foods CEO Tom Hayes said most of the eliminated positions will come from corporate offices in Springdale, Chicago and Cincinnati. No specifics were provided in a news release. Tyson Foods said it will take questions from equity analysts during a conference call Friday morning.
“We’re grateful to everyone who has contributed to the company’s success, and we’re thankful for their time with Tyson Foods,” Hayes said. “These are hard decisions, but I believe our customers and consumers will benefit from our more agile, responsive organization as we grow our business through differentiated capabilities, deliver ongoing financial fitness through continuous improvement and sustain our company and our world for future generations.”
Tyson Foods did not respond to request for specifics on the local headcount reduction, nor did the company furnish details of severance packages provided. Insiders told Talk Business & Politics the company has worked with a third-party consultant to review staffing levels.
Earlier this year, Tyson Foods said it had about 3,000 corporate employees in Northwest Arkansas. About 2,000 of them work at the main headquarters on Don Tyson Parkway. In Chicago, there are about 500 corporate employees and 500 corporate employees at the Dakota Dunes, S.D., offices.
NEED TO BE ‘MORE AGILE’
The layoffs were not unexpected as Tyson Foods made similar reductions following the acquisition of Hillshire Brands. Hayes told Talk Business & Politics earlier this year some jobs were moved from Springdale to Chicago as he restructured the company’s marketing division. In August, Hayes also pared down the management team ahead of the third quarter earnings announcement. Two top executives, Andy Callahan, president of North American Foodservice and International, and Chief Growth Officer Monica McGurk were dismissed in August. This was the second management structure Hayes made since taking over as CEO 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 August “This simple design creates individual responsibility for the performance of our segments to enable faster, better, decisions.”
In its fiscal fourth quarter earnings report set for Nov. 13, Tyson Foods plans to report restructuring and other charges of up to $150 million, with approximately $70 million impairment for costs related to in-process software implementations, up to $50 million in employee termination costs and up to $30 million in contract termination costs.
Also on Thursday, Hayes provided an update on the AdvancePierre Foods acquisition, which was completed in June. He said with additional eliminations and non-value-added costs from the synergies, Tyson Foods expects cumulative net savings of $200 million, $400 million and $600 million over the next three fiscal years. The savings primarily will come from the Prepared Foods and Chicken segments, with most savings from supply chain, procurement and overhead, Hayes said.
Thursday after equity markets closed, Tyson Foods also raised its earnings guidance for fiscal 2017 – which ends Saturday – to between $5.20 and $5.30 per share. Tyson Foods said the 5% bump in earnings were related to better-than-expected profits in its beef segment. The company also adjusted its fiscal 2018 earnings per share guidance to a range of $5.70 to $5.85, which would be the seventh consecutive year of earnings per share growth for the meat company.
Hayes reiterated the company’s “Financial Fitness” plan in the release by saying, “We are creating momentum behind our continuous improvement agenda as we know we can be even more efficient operators. … We are a good partner for growth for our customers and are constantly challenging ourselves to identify opportunities to create value for our consumers, customers and shareowners.”
Wall Street approved of the leaner structure and new guidance, sending Tyson Food shares up 5.42% in after hours trading. Tyson Foods (NYSE: TSN) closed Thursday at $65.45. Share rose to $69 hour afters up $3.55 over the day’s close. For the past 52 weeks, Tyson Foods shares have traded between $76.38 and $55.72. Shares are up 4.66% year-to-date, excluding the after-hours price gains on Thursday.