September 7, 2006
Tyson Foods' cost cutting efforts on track
Tyson Foods Inc, the largest US meat company, said on Wednesday (Sep 7) its US$200 million cost-cutting efforts are proceeding on schedule as the company works to return to profitability.
The company is confident it would exceed this target, Wade Miquelon, Tyson's chief financial officer said.
However, Miquelon said more than 90 percent of the savings from the cost cutting plan would be achieved during the next fiscal year.
Cost-cutting efforts were first announced in May and then expanded in July. The company aimed to cut 420 jobs and eliminate 430 vacant positions.
In addition, the company has raised prices for many of its meat products, closed beef plants, and cut chicken production, said Miquelon.
Tyson has reported a loss for two consecutive quarters with a US$127 million loss in the earlier quarter and a US$52 million loss in the next.
Tyson's CEO Richard Bond, who replaced John Tyson in May, said the company would be looking at ways to use successful products for one sector in other sectors. For example, a successful food service product would be adaptable to supermarkets, he said.
Tyson's operations has been hit by an excess of meat as poultry sales abroad slowed due to bird flu. High energy costs also cut into profits.
Currently, beef and poultry exports are on the road to recovery. Chicken prices are moving higher as the effects of cuts in production are felt, with a 5-percent cut in production would be fully implemented by the end of October.
Energy costs at Tyson are up US$137 million dollars through three quarters compared with the same period a year ago, said Bond.
Barring any further disasters, energy costs for this next year would not be up nearly as much, said Bond.