Tyson Foods Inc named its president, former technology executive Dean Banks, as its new chief executive on Monday 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 economic reopening confronts Banks, who formerly worked for Google-parent Alphabet Inc’s experimental research division. He joined Tyson’s board in 2017 and became president in December 2019.
Chairman John Tyson said Banks 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 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 spent $340 million on COVID-19 testing, personal protective equipment and other direct costs related to the disease. The company has tested about 40,000 employees, one-third of its workforce, and less than 1% are currently infected, White said.
Grocery-store sales have spiked during the pandemic, but Tyson said it is grappling with a larger drop in demand from food-service outlets. The company predicted lower sales volumes in its chicken and prepared foods segments in the last fiscal quarter.
In the third quarter ended June 27, Tyson’s chicken unit swung to an adjusted operating loss of $120 million from 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.
JP Morgan said it had expected Banks to replace White, although the change may spook investors. Shares rose 1.6%.
Banks should bring Tyson “new vision” on innovation and automation, said Arun Sundaram, equity analyst at CFRA Research.
Tyson’s quarterly sales fell 7.9% to $10.02 billion. Analysts expected $10.56 billion, according to IBES data from Refinitiv.
Excluding items, Tyson earned $1.40 per share. Analysts had expected 94 cents.
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