SPRINGDALE, Ark., Jan. 6 /PRNewswire-FirstCall/ -- Unfavorable beef
operating margins have prompted Tyson Foods (NYSE: TSN) to temporarily suspend
operations at four beef plants and the second shift at another. The affected
plants are located in the Upper Midwest and Pacific Northwest, and have been
hurt by a combination of tight cattle supplies, lackluster domestic beef
demand and the continued absence of key export markets.
Beginning Monday, January 10, Tyson will suspend operations at plants in
Denison, Iowa; Norfolk and West Point, Nebraska; and Boise, Idaho. The
company will also temporarily discontinue second shift processing at Pasco,
Washington. The suspension of operations is expected to last three to five
weeks and will reduce the company's weekly cattle slaughter by 25,000 to
30,000 head, compared to pre-holiday levels.
"This is a difficult decision, however, we believe it's the right thing
for us to do at this time, especially given the challenging market conditions
and unfavorable operating margins our beef business continues to face," said
John Tyson, chairman and CEO of Tyson Foods. "Our plants have been running at
less than 75% of capacity over the past two months, which is 10 to 15% below
historical levels."
U.S. cattle marketings were down more than 8% in 2004. "We anticipate
cattle numbers will increase in the coming months," according to Gene Leman,
senior group vice president of Tyson Fresh Meats. "We also look forward to
the previously announced reopening of the U.S. border to Canadian cattle in
early March, which will especially benefit our plants in the Upper Midwest and
Pacific Northwest."
Based upon the company's outlook for fiscal year 2005, the company now
estimates its fiscal 2005 diluted earnings per share to be in the range of
$1.15 to $1.40. The company still expects the majority of its earnings to
occur in the last six months of the fiscal year.
Approximately 2,100 workers are affected by the temporary suspension of
operations. This includes 275 Team Members at Denison, 900 at Norfolk, 275 at
West Point, 250 at Boise and 400 at Pasco.
Tyson is encouraging affected Team Members to take paid vacation for the
first week operations are suspended. The company will then pay the equivalent
of a 32 hour work week in each of the next three weeks workers are off the
job. Tyson will also continue to offer benefits, including health insurance,
to qualified Team Members.
Most management, management support and maintenance workers at the
affected plants will remain on the job, working on various maintenance,
sanitation and training projects.
Tyson Foods, Inc., founded in 1935 with headquarters in Springdale,
Arkansas, is the world's largest processor and marketer of chicken, beef, and
pork and the second-largest food company in the Fortune 500. The company
produces a wide variety of protein-based and prepared food products, which are
marketed under the "Powered by Tyson(TM)" strategy. Tyson is the recognized
market leader in the retail and foodservice markets it serves, providing
products and service to customers throughout the U.S. and more than
80 countries. Tyson has approximately 114,000 Team Members employed at more
than 300 facilities and offices in the United States and around the world.
Forward-Looking Statements
Certain statements contained in this communication are "forward-looking
statements" such as statements relating to anticipated cattle numbers,
reopening of the Canadian border and expected earnings. These forward-looking
statements are subject to risks, uncertainties and other factors, which could
cause actual results to differ materially from historical experience or from
future results expressed or implied by such forward-looking statements. Among
the factors that may cause actual results to differ materially from those
expressed in, or implied by, the statements are the following: (i)
fluctuations in the cost and availability of raw materials, such as live
cattle, live swine or feed grains; (ii) market conditions for finished
products, including the supply and pricing of alternative proteins, and the
demand for alternative proteins; (iii) risks associated with effectively
evaluating derivatives and hedging activities; (iv) access to foreign markets
together with foreign economic conditions, including currency fluctuations and
import/export restrictions; (v) successful rationalization of existing
facilities, and the operating efficiencies of the facilities; (vi) changes in
the availability and relative costs of labor and contract growers; (vii)
issues related to food safety, including costs resulting from product recalls,
regulatory compliance and any related claims or litigation; (viii) adverse
results from litigation; (ix) risks associated with leverage, including cost
increases due to rising interest rates or changes in debt ratings or outlook;
(x) changes in regulations and laws (both domestic and foreign), including
changes in accounting standards, environmental laws and occupational, health
and safety laws; (xi) the ability of the Company to make effective
acquisitions, and successfully integrate newly acquired businesses into
existing operations; (xii) effectiveness of advertising and marketing
programs; and (xiii) the effect of, or changes in, general economic
conditions. The Company wishes to caution readers not to place undue reliance
on any forward-looking statements, which speak only as of the date made.
Tyson undertakes no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or
otherwise.
SOURCE Tyson Foods, Inc.
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Related links:
http://www.tyson.com
CONTACT:
media, Gary Mickelson, +1-479-290-6111, or
investors, Louis Gottsponer, +1-479-290-4826, both of Tyson
Foods, Inc.
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