Shares of Tyson Foods, Inc. (TSN) slid just over 0.5% in Tuesday's trading after the company announced a surprise CEO departure before the market opened.
The Springdale, Arkansas-based food industry leader announced this morning that current president and CEO Tom Hayes, the company's leader since 2016, will be replaced by Noel White effective September 30.
Gary Mickelson, director of media relations at Tyson, affirmed that company focus will remain steadfast to Real Money in an email.
"We can tell you there will be no change in corporate direction," he said. "Noel will continue to oversee Tyson Foods' ongoing expansion into new product categories and maintain the company's focus on global growth, innovation, value-added capabilities and customer partnerships to drive long-term value."
The company said the decision to transition leadership was provoked by personal circumstances for Mr. Hayes. No prior indication of a change was given at company presentations and no disclosure on the personal matter was made.
White is currently a group president of Beef, Pork and International business for the company and has maintained a post at Tyson since 2001.
To give confidence to shareholders, White will need to show he can change the trajectory of the company, which has fallen from a 52-week high of $84.65 per share to just $62 this morning, a nearly 30% drop.
Tariff Trouble
Investors and experts have pointed to the ongoing trade war with China and NAFTA renegotiation as contributing factors to the slide so far this year.
The tariffs have been noted as harmful to the company's margins on products as well as its export sales trend.
Analysts and investors have picked up on this as well, citing the uncertain nature of trade negotiations between some of the company's largest markets in Mexico, China, and the United States.
Even investors who are bullish on the long term potential of the company in its protein production capacity expressed wariness on trade.
"In the near term, we need to let these trade issues clear up. For now, it's just too uncertain to add to [the position]," Spencer Shelman, portfolio manager for Palouse Capital, told Real Money. "We have not been adding to our position [in Tyson] on their way down and don't plan on adding to it soon."
His firm, which oversees a total of $295.4 million on behalf of its clients, holds 46,108 shares of Tyson.
Right Man for the Job?
Yet, company chairman John Tyson said he was confident in White's ability to drive international business as the company lobbies for markets to remain as open as possible.
"He has run our beef, pork, and poultry businesses and is now helping Tyson Foods capitalize on international opportunities," he said. "His deep institutional knowledge and a stellar track record over his more than 30-year career at Tyson Foods and a predecessor company give the board the utmost confidence in his ability to drive the business forward, accelerate global growth and create long-term value for shareholders."
As the company moves forward to try to take advantage of secular trends in protein consumption, White's transition from international leader to CEO is indicative of that focus.
The company also affirmed its fiscal year 2018 guidance, which slates a range on earnings per share from $5.70 to $6. Analyst consensus stands at $5.90, according to FactSet data.
