Tyson Foods Names New CEO As Coronavirus Raises Costs
Tyson Foods Inc named its president, Dean Banks, as its new chief executive, as the meatpacker faces unprecedented disruptions from the COVID-19 outbreak.
Tyson said Banks will replace 37-year company veteran Noel White in October as it reported lower-than-expected quarterly sales. The company predicted the pandemic will increase operating costs and hinder sales volumes into next year.
Uncertainty over the reopening of the economy confronts Banks, who joined Tyson's board in 2017 and became president in December 2019.
Chairman John Tyson said Banks, a former executive at Google-parent Alphabet Inc's experimental research division, will help the company integrate more technology into operations and focus on employee health.
The novel coronavirus has infected thousands of U.S. meatpacking workers and led to temporary meat shortages as processors like Tyson, JBS and Smithfield Foods closed slaughterhouses in April and May. Plants have reopened, but absences among workers who are afraid of getting sick continue to limit output.
Tyson said it faces reduced demand from restaurants and food-service outlets that has not been offset by stronger meat sales at grocers. The company predicted its chicken and prepared foods segments will suffer lower sales volumes in the last fiscal quarter.
In the third quarter ended June 27, Tyson's chicken unit reported an adjusted operating loss of $120 million, compared with income of $237 million a year earlier.
"Our level of future growth is dependent on away-from-home eating occasions, which will be impacted by communities opening up and potentially reclosing," White told analysts on a call.
JP Morgan said it expected the leadership change, although it may spook some investors. Shares were up about 1%.
Tyson's quarterly sales fell to $10.02 billion from $10.89 billion. Analysts expected revenue of $10.56 billion, according to IBES data from Refinitiv.
Excluding items, Tyson earned $1.40 per share, beating analysts' estimates for 94 cents.
Tyson said direct costs related to COVID-19 were about $340 million, including employee testing and personal protective equipment.