Tyson Foods Bond proposes $110 million in spending cuts

26/05/06 The new CEO of Tyson Foods (NYSE: TSN) outlined his strategy for returning the company to profitability, which includes at least $110 million in spending cuts, Tyson officials have reported.

In a video presentation to the company’s Team Members, Richard L. Bond reaffirmed his commitment to Tyson’s Core Values established by Chairman John Tyson, as well as the company’s long-term strategy of creating more value-added products, improving operational efficiencies and expanding its international business.

“I continue to believe our long-term strategies are still very sound and provide us with a focused long-term perspective for the future,” he said.

Bond also indicated the company’s single most important short-term goal is to “return our company to profitability now.” He said “We must take control of things we know or believe are in our control and get laser-focused on our current business opportunities.”

To achieve this objective, he has proposed three measures. He wants the company to return to a “commodity mindset” in its approach to its commodity businesses, create an overall culture of “agility” and improve cost management.

While Tyson Foods is producing more value-added products, more than half of the company’s revenue is from commodity products, which typically provide a smaller profit margin. Bond wants the company to approach this business with more of a “commodity mindset” and “sense of urgency.”

He also wants to create a culture of agility. In other words, he wants management to focus more time on activities that make money and provide top line growth.

In addition, Bond wants immediate cost management and cost reduction. He has asked John Lea, Senior Group Vice President and Chief Development Officer, to oversee an initiative to identify at least $110 million in spending that can be eliminated from the company’s fiscal 2007 plan. Every area of the company will be asked to do an in-depth review of such things as staffing, programs, reports, information requests, travel and entertainment expenses and consulting fees as well as opportunities for improvement. Bond has asked that this review take no more than a month, so managers have a clear picture of the company’s budget parameters as they prepare their plans for fiscal 2007. The new fiscal year begins October 1, 2006.