Tyson Foods CEO to step down after profit misses estimate

Tyson Foods Inc reported a lower-than-expected quarterly profit on Monday and said Chief Executive Donnie Smith would step down at the end of the year as the No. 1 U.S. meat processor looked to sell more branded prepared foods.

Shares of the company tumbled 15 percent to $57.27 in early trading on Monday after results from its chicken and prepared foods businesses disappointed.

Tyson said its president, Tom Hayes, would succeed Smith, 56, who has been at the helm since November 2009. Hayes, 51, was previously the chief supply chain officer for The Hillshire Brands Co, which Tyson bought in 2014.

Tyson has been looking to shore up profits by selling more 'value-added” items such as pre-seasoned products, marinated meats and heat-and-serve meals, which command higher margins than basic meats.

'The board's decision to name Tom (Hayes) CEO at this time was based on both his track record and how his skills align with the company's strategic direction and continuing evolution,” John Tyson, chairman of the board and the founder's grandson, said.

Hayes will work to sell more products in developing markets, expand product categories and continue investing in Tyson's core nine categories, which include its Jimmy Dean, Hillshire Farm and Ball Park brands, Tyson said.

Smith will stay on in an advisory role for three years after he steps down on Dec. 31.

Tyson's sales fell 12.8 percent to $9.16 billion in the fourth quarter ended Oct. 1, for a fourth straight quarter of declines, due to lower beef prices and a switch to more value-added items in its chicken business.

Analysts, on average, had expected revenue of $9.38 billion, according to Thomson Reuters I/B/E/S.

Net income attributable to Tyson surged 51.6 percent to $391 million, or $1.03 per share, helped by lower feed and livestock costs. Despite that, Tyson's chicken business was hit hard by a spike in soybean meal costs.

Excluding items, the company earned 96 cents a share, missing analysts' average estimate of $1.17 per share.

Tyson forecast profit of $4.70 to $4.85 per share for the year ending September 2017, below analysts' average estimate of $4.98.

The Springdale, Arkansas-based company said it expected sales to be flat in the current year.

As of Friday's closing share price of $67.36, Tyson's stock had surged 26.3 percent this year.

(Reporting by Lisa Baertline in New York; Additional reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Martina D'Couto and Bernadette Baum)