Tyson Foods has unveiled plans to cut approximately 450 positions, primarily from its corporate offices in Springdale, Arkansas; Chicago; and Cincinnati.
“We’re grateful to everyone who has contributed to the company’s success, and we’re thankful for their time with Tyson Foods,” said Tom Hayes, Tyson’s president and CEO. “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.”
The move comes as Tyson implements its previously announced “Financial Fitness” plans and adjusts to its recent acquisition of AdvancePierre Foods. Through a “combination of synergies” from the integration of AdvancePierre, and additional eliminations of non-value-added costs, the company expects cumulative net savings of $200 million, $400 million and $600 million over fiscal years 2018, 2019 and 2020, respectively. These savings primarily will impact the Prepared Foods and Chicken segments, focusing on supply chain, procurement and overhead.
“We are creating momentum behind our continuous improvement agenda as we know we can be even more efficient operators,” Hayes said of the Financial Fitness plan. “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.”
Guidance boosted following strong beef earnings
Just before the close of Tyson’s fiscal 2017, the company increased its adjusted earnings guidance for the 2017 fiscal year to an adjusted $5.20-5.30 per share, up from $4.95-5.05, primarily due to much better than expected earnings in the beef segment.
Guidance for fiscal 2018 is an adjusted $5.70-5.85 earnings per share, which would be the seventh consecutive year of record adjusted EPS.
In its fiscal fourth quarter earnings report, Tyson plans to report restructuring and other charges of approximately $140-$150 million, composed of an approximately $70 million impairment for costs related to in-process software implementations, $45-$50 million in employee termination costs and $25-$30 million in contract termination costs.
The company plans to provide a reconciliation of its fourth quarter adjusted EPS and its full-year fiscal 2017 adjusted EPS guidance to its fourth quarter GAAP EPS and its full-year fiscal 2017 GAAP guidance in its fourth quarter earnings report scheduled for Nov. 13.