Tyson Foods, Inc. reported its fiscal third quarter results Monday, which the meatpacking and processing company says was negatively impacted by approximately $340 million in direct incremental expenses related to COVID-19. Adjusted quarterly earnings came in $1.40 per share, down 5% from the prior year.
"Without a doubt, our third fiscal quarter was one of the most volatile and uncertain periods I've seen during my time in the industry," says Noel White, Tyson Foods chief executive officer. "However, our commitment to team member health and safety and investments in operations and portfolio strategy effectively positioned us to weather unprecedented COVID-19 marketplace volatility while allowing us to support our farmers, ranchers and producers and meet our customers' needs.
"I want to thank our team members for their dedication and diligence as we continue to navigate the COVID-19 pandemic. At Tyson Foods, our focus remains on ensuring the health and safety of our team members, their families and our communities. We take this responsibility very seriously, and we're proud that our team members have gone above and beyond to help us supply food for the nation.
"Within each of our segments, we absorbed higher-than-normal operating costs related to COVID-19. Nonetheless, Tyson delivered strong results during the third quarter led by strength in our beef and pork segments. Despite short-term challenges, we're maintaining a clear focus on the long term. Our fourth quarter is off to a solid start, and while COVID-19 has been disruptive, we have a strong long-term outlook for Tyson Foods."
In the pork segment, sales volume decreased in the third quarter and first nine months of fiscal 2020 primarily due to lower production throughput associated with COVID-19 despite strong demand for pork products and increased domestic availability of live hogs. Average sales price increased in the third quarter and first nine months of fiscal 2020 as pork demand remained strong amid supply disruptions related to the impact of COVID-19. Operating income increased in the third quarter and first nine months of 2020 primarily due to COVID-19 disruptions which increased the spread between preexisting contractual agreements and the cost of live hogs, partially offset by production inefficiencies and direct incremental expenses related to COVID-19.
The USDA projects domestic production will increase approximately 1% in fiscal 2021 as compared to a COVID-19 impacted fiscal 2020.
Banks to succeed White as CEO
Tyson also announced Monday that Dean Banks will succeed White as CEO, while maintaining the role of president, effective Oct 3. White, who assumed the CEO role in 2018, will remain with Tyson in a new role as executive vice chairman of the board of directors.
"The board and I are truly excited about the breadth and depth of capabilities of Dean and the entire executive leadership team, and we look forward to the energy and vision they will bring in leading Tyson Foods into the future," says John Tyson, chairman of the board of Tyson Foods. "It's clear to the board that Dean's impressive background in entrepreneurship, technology and the healthcare industry make him ideally suited to lead Tyson in its efforts to integrate advanced technologies into our operations and further our focus on team member health and safety."
Banks' expanded role of CEO is part of the board's deliberate, long-term succession planning. Since joining Tyson Foods as a director in 2017 and his appointment as president in 2019, Banks has worked closely with Tyson leadership to develop a greater understanding of the business and strategic vision for future growth.
"I want to offer my sincere thanks to the more than 140,000 team members who have given me a warm welcome over the past three years," says Banks. "I've had the opportunity to get to know many of them, and their integrity, passion and commitment to feeding the world is a critical part of why I'm here. I am honored to lead Tyson Foods as its next CEO and look forward to working with our company's leadership in executing our strategy to capitalize on opportunities for innovation across the protein spectrum. Building upon the strong foundation established by Noel, I will continue to serve our customers, team members, stakeholders and shareholders to drive our strategic initiatives and build our business in current and new categories and geographies."
"On behalf of the Tyson Foods' board of directors, the Tyson Family, and all our team members, I want to thank Noel for his 37 years of service with Tyson and his many contributions to the company, including his steady leadership over the past two years," says Tyson. "He has an unparalleled knowledge of the protein industry and our business, and he has earned the trust and admiration of our team members and our company leaders, many of whom he has mentored. His humility and leadership have left a lasting impression on our organization, and we are pleased that his service will continue as executive vice chairman of the board of directors."