Tyson Foods Inc. announced that it has increased the adjusted guidance for fiscal 2017 as well as the adjusted guidance for fiscal 2018 and cost savings targets for 2018-20. Adjusted earnings guidance for the 2017 fiscal year, which ends Sept. 30, has been increased to $5.20-5.30 per share, up from $4.95-5.05, primarily due to much better-than-expected earnings in the Beef segment.
Guidance for fiscal 2018 is an adjusted $5.70-5.85 earnings per share, which would be the seventh consecutive year of record adjusted earnings per share.
The company plans to provide GAAP results for its 2017 fourth quarter and full year in its fourth-quarter earnings report scheduled for Nov. 13; however, at this time, the company is unable to reconcile its full-year fiscal 2017 and 2018 adjusted earnings per share guidance to its full-year fiscal 2017 and 2018 projected generally accepted accounting principles (GAAP) guidance because certain information necessary to calculate such measures on a GAAP basis is unavailable or dependent on the timing of future events outside of Tyson's control.
Tom Hayes, Tyson president and chief executive officer, said the company is implementing its previously announced “Financial Fitness” plans.
“We are creating momentum behind our continuous improvement agenda as we know we can be even more efficient operators,” he said. “We are a good partner for growth for our customers and are constantly challenging ourselves to identify opportunities to create value for our consumers, customers and share owners.”
Through a combination of synergies from the integration of AdvancePierre Foods acquired in June and additional eliminations of non-value-added costs, the company expects cumulative net savings of $200 million, $400 million and $600 million over fiscal years 2018, 2019 and 2020, respectively. These savings primarily will affect the Prepared Foods and Chicken segments, focusing on three areas: supply chain, procurement and overhead.
Tyson also announced that it is reducing head count by approximately 450 positions across several areas and job levels. Most of the eliminated positions will come from the corporate offices in Springdale, Ark.; Chicago, Ill., and Cincinnati, Ohio.
“We’re grateful to everyone who has contributed to the company’s success, and we’re thankful for their time with Tyson Foods,” Hayes said. “These are hard decisions, but I believe our customers and consumers will benefit from our more agile, responsive organization as we grow our business through differentiated capabilities, deliver ongoing financial fitness through continuous improvement and sustain our company and our world for future generations.”
In its fiscal fourth-quarter earnings report, Tyson said it plans to report restructuring and other charges of approximately $140-150 million, comprised of an approximately $70 million impairment for costs related to in-process software implementations, $45-50 million in employee termination costs and $25-30 million in contract termination costs.