A major meatpacking giant posted lower-than-expected earnings Monday and said it is unsure how long the uncertain market brought about by the coronavirus will linger in its bottom line.
Tyson’s second quarter earnings statement showed adjusted earnings of 77 cents per share, a 36% drop from the prior year. The company also said it secured a $1.5 billion term loan facility.
Tyson Foods’ CEO Noel White pointed to issues at company packing plants and said the facilities have “instituted safeguards that meet or exceed CDC or OSHA guidelines.”
“During the quarter, we witnessed an unprecedented shift in demand from foodservice to retail, temporary plant closures, reduced team member attendance, and supply chain volatility as a result of the virus,” White said in a statement. “Despite these challenges, we were able to adjust our product mix and redirect products to the appropriate channels.
“While we cannot anticipate how long the challenges presented by COVID-19 will persist, we remain focused on driving long-term growth,” he added.
Sales volume increased in the company’s beef and pork segments in the second quarter but decreased in its chicken business “due to lower volume from our rendering and blending business.”
Tyson, like many other food companies, has been forced to adjust to a shift from restaurant to retail consumption across much of its product offerings, but the company said the “volume increases in retail have not been sufficient to offset the losses in foodservice.” That, along with other challenges the company says will “increase our operating costs and negatively impact our volumes for the remainder of fiscal 2020” leads to anticipated decreases in volumes in the second half of fiscal 2020.
“Operationally, we have and expect to continue to face slowdowns and temporary idling of production facilities from team member shortages or choices we make to ensure operational safety,” a company release noted. “The lower levels of productivity and higher costs of production we have experienced will likely continue in the short term until the effects of COVID-19 diminish.”
The company’s second quarter ended March 28; many companies shuttered packing plants in the month of April, including Tyson’s indefinite closing of its Waterloo, Iowa, plant.
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However, many companies are starting to bring facilities back online. Tyson’s Logansport, Ind., pork facility resumed “limited production” last week, the JBS beef plant in Greeley, Colo., reopened late last month, and the Smithfield pork plant in Sioux Falls, S.D., is partially reopening Monday, according to media reports. A Smithfield spokesperson did not respond to a request for comment.
Last week, President Donald Trump authorized Agriculture Secretary Sonny Perdue to “take all appropriate action” under the Defense Production Act “to ensure that meat and poultry processors continue operations” consistent with guidance issued Sunday by the Centers for Disease Control and Prevention and the Occupational Safety and Health Administration on how to protect workers from the virus.
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