Chicken prices are down. That's good news for chicken eaters, but bad news for Tyson Foods.
The meat processor, which supplies about a fifth of the beef, pork and chicken in the United States, said Monday that it is shutting down four chicken plants -— two in Missouri, one in Indiana and one in Arkansas — following declining chicken revenue. The Arkansas-based company previously announced two separate closures in the spring.
The company reported earnings for the quarter ending July 1 that showed chicken revenue fell about 3.5%.
Volumes actually rose, but prices dropped 5.5%.
In the US at large, weaker demand in retail plus few discounts in restaurants pulled down prices for boneless chicken breast meat in the second quarter, according to a July report from Rabobank. Chicken breast prices were down 60% compared to the second quarter last year, when they were at record levels, due to a greater supply of chicken and plenty of alternatives like ground beef, according to the report.
Tyson CEO Donnie King pointed to these market conditions when discussing Tyson's chicken sales decline during an analyst call Monday.
"Market conditions in chicken are still challenged with commodity prices across most cuts remaining significantly lower compared to last year," he said.
It's been a rough few years for Tyson on the chicken front. "We've had a number of fits and starts from the breeder side to demand," King said. A few years ago, Tyson said it had an "unexpected decline" in hatchings because of the types of roosters it used. And then, over the holidays, demand came in below expectations.
"November and December were softer than we expected or planned for in retail fresh chicken," King said during a February analyst call discussing results for the last quarter of 2022. That meant oversupply and, as a result, lower prices.
Since then, "we have aligned our supply to our demand," King said Monday. "We're on the right path."
Plant closures
In March, the company announced the closure of one chicken processing plant in Glen Allen, Virginia, and another in Van Buren, Arkansas. Altogether, it laid off nearly 1,700 workers as part of the closure. Monday's announcement brings the tally up to six closures announced this year.
"The facilities that we are closing... [are] typically smaller in scale and in need of major capital to make them viable," said King. He credited automation, among other factors, for allowing the company to close facilities while maintaining the right amount of supply. Tyson is not sharing the number of jobs impacted by the four closures announced today, a representative told CNN Monday.
The company is seeing challenges in other parts of the business, as well. Its pork volumes and prices both fell. Beef prices rose, but volumes also fell.
Tyson may take action on that side of the business, King said. "I'm not telling you that we're not looking at beef and pork in the same manner that we have looked at chicken," he told analysts. "We're evaluating everything."
Tyson reported quarterly sales declined 3%, compared to the same period last year. The company posted a $417 million loss. Tyson's shares slumped about 6% in Monday trading.
Tyson said in April that it would lay off about 15% of senior leadership roles and 10% of corporate roles.