Dive Brief:
- Chicken processor Tyson Foods will continue to focus on narrowing its spending and improving its “fundamentals” after growth in its chicken segment led to a “positive turnaround” for its third quarter, executives said Monday.
- While lower pricing and input costs saw sales in the segment drop by 3.2% year over year, chicken saw its best third quarter profit result in eight years, executives said during the call. Chicken logged a surprising $244 million profit for the quarter, as compared to a $314 million loss in the prior year period.
- The company’s priorities are to “maintain financial strength” and continue to invest in the business, interim CFO Curt Calaway said Monday during the company’s Q3 2024 earnings call, which includes honing in on capital expenditures. Capex of $263 million for the quarter ended June 29 represented a sequential decline for the sixth consecutive quarter, “reflecting our focus on controlling capital deployment while continuing to invest for profitable growth,” Calaway said.
Dive Insight:
The positive swing for the country’s largest meat processor by sales comes approximately just a few months after the Springdale, Arkansas-based company suspended its CFO, John R. Tyson from his duties following an arrest for charges of driving while intoxicated. The company tapped Curt Calaway as interim CFO following the suspension, CFO Dive previously reported.
Tyson, the son of board chairman John H. Tyson, pled not guilty to the charges last month in the Fayetteville District Court of Fayetteville, Arkansas, according to a report by the Wall Street Journal at the time. His June arrest came two years after Tyson was arrested on charges of public intoxication and criminal trespassing, with the CFO pleading guilty and paying $440 in fines.
The company’s choice to tap Calaway, an 18-year veteran of the meat processor, could have been made as a bid to help reassure investors of Tyson’s overall financial health, experts told CFO Dive at the time. His interim appointment came after the company reported a lukewarm second quarter in May; while net income for its second quarter hit $148 million compared to a $91 million lost for the prior year period, executives warned persistent inflation was eating into customer demand and sales, chipping away at its progress to restore profitability, according to a report by Bloomberg.
For the quarter ended June 29, Tyson reported sales of $13.3 billion, a 0.5% jump year-over-year, according to its earnings results. Results in its chicken segment are “clearly” benefiting from improved market conditions, CEO and President Donnie King said Monday, though Tyson’s “actions and focus on the fundamentals across all aspects of the value chain are also contributing to these strong results,” he said. While its chicken segment saw a surprise profit, however, Tyson continued to see headwinds in other segments, notably beef where it recorded a loss of $69 million, alongside a $62 million loss for its pork segment.
Tyson will continue to focus on improving capex, King said Monday, zeroing in on profitable growth despite what he termed a “challenging market” for beef. The company is “maintaining its tight controls on spending” for the remainder of the year, Calaway said, expecting capex of between $1.2 billion to $1.3 billion.
Tyson did not immediately respond to requests for comment regarding the status of Tyson’s suspension as CFO.
