As trade tensions with China that keep escalating and African swine fever and unclear implications for pork supply, it may seem like an odd time for Tyson Foods, Inc. (TSN) to announce a new CEO.
Noel White will take over as CEO as of the end of the month, taking over from Thomas Hayes who is stepping down abruptly for unspecified personal reasons.
Noel White "has run our beef, pork, and poultry businesses and is now helping Tyson Foods capitalize on international opportunities," chairman John Tyson said this morning, citing the company's continued commitment to international business, even as it comes under macroeconomic pressure.
The trade war between the U.S. and China has brought pressure on margins, supply chain, and share price for Tyson Foods, causing concern among investors and analysts.
Since the announcement of increased tariffs impacting beef, pork, and chicken importers and exporters on June 15, the company's stock has fallen from a high of $71.95 to $63.14 at 11:30 a.m. in New York. The decrease represents an over 12% drop since the tariff announcement.
Tyson's share dropped 0.5% as of 12:49 p.m. in New York.
Expansions and Acquisitions
While the company has recently made significant purchases to expand its global presence, it has also widened the company's global exposure amid an escalating trade war.
Most notable is the company's recent $2.16 billion acquisition of Keystone Foods.
Outgoing CEO Tom Hayes extolled the value of international expansion in an announcement of the transaction last month.
"This acquisition will expand our international presence and value-added production capabilities and help us deliver more value to our food service customers," he explained. "Keystone provides a significant foundation for international growth with its in-country operations, sales and distribution network in high growth markets in the Asia Pacific region as well as exports to key markets in Europe, the Middle East and Africa."
The company has been expanding internationally as of late due to a growing market in the Asia Pacific region, which White will have been monitoring closely as the international business chief.
Under White's international leadership, beef exports for the company got a boost just last year a boost as China lifted a governmental ban on beef from the United States that was enacted in the wake of the mad cow disease scare.
Trade problems have turned this tailwind from one year ago into a headwind and will require a strong leader to work through.
The company appears to be betting that White is the man for the job. The market, as of yet, is not certain as shares remain pressured.
No Laughing Matter
"We'll let switch gears and then come to that very funny topic: tariffs, trade and so on," Benjamin Theurer, head of the Mexico equity research at Barclays Bank PLC, joked at the Barclays Consumer Staples Conference on September 5.
"Not so funny to us," outgoing CEO Thomas Hayes said in response, according to the transcript of the event compiled by Tyson.
The impact that shares have felt in recent months from the macroeconomic pressure of the trade war have likely not left investors laughing either.
John Kathol, Tyson's vice president of international relations, discussed the topic of tariffs at length during the conference, expressing the company's support of free and open trade.
"The entire supply chain as it relates to food is better served by free trade and open markets than it is to have a tariff," he said. "Tariffs just create inefficiency, and the best way to satisfy the consumer in the long run is by free trade."
He further lamented how the cost must be passed on down the supply chain, which eats into margins all the way through the line.
"We need for these export markets to remain open," he added. "We need that certainty of trade. Uncertainty is what hurts these markets and the tough part about that is we, as a packer in our Beef and Pork businesses, we end up having to pass that back to the producer."
As the company relies on exports to take on additional sales for the company, it is imperative for them to remain open.
At present, the company's export business makes up about 10% of total sales, at $3.9 billion as of the last 10-K filing. The figure represents a decrease from $4.7 billion in 2014, in part due to impacts from tariffs.