Tyson Foods Inc. of Springdale is looking to sell its poultry business in China as the company cuts costs and revamps operations in an effort to return to profitability, according to a report Thursday by Reuters.
The report, which cites three unnamed sources with knowledge of the matter, said that Tyson has hired Goldman Sachs to advise on the sale. Preliminary information has been sent to potential buyers, which were said to include "a number of private equity firms."
In response to questions from Reuters and Arkansas Business, Tyson declined to comment.
Reuters reported that Tyson's chicken business in China has annual sales of about $1.1 billion, but the total valuation of the enterprise is unclear.
Tyson opened its first factory in China in 2001, according to the company's website. It produces meat in the country's whole industry chain, from breeding and slaughtering to processing and distribution for chicken, beef and pork. Operations include three research and development centers, seven processing plants and dozens of breeding farms.
Tyson this year has announced plans to close six U.S. chicken plants and lay off thousands of workers, including many in its corporate ranks, as its poultry segment continues to struggle. Amid the cuts, Tyson revealed plans for a $70 million hatchery in Hope that will support a broader push for efficiency.
The publicly traded protein giant reported a $417 million loss in its fiscal third quarter, the second consecutive quarter it failed to turn a profit. The company posted a $97 million loss in its second quarter.
Tyson's poultry business struggled to meet demand in early 2022, then became oversupplied and has been forced to sell at a discount. CEO Donnie King has vowed to take "bold action" to improve performance, lower costs and boost capacity utilization as part of a plan to of making Tyson stronger in the long-term.
The company's China pull-out does not necessarily come as a surprise. Ongoing U.S.-China tensions, China's increasingly repressive government and concerns over the health of its economy are among numerous factors that are causing anxiety among foreign firms that operate there.
A 2023 American Chamber of Commerce China report said that while its members still "see China as a priority market, their willingess to increase investment and strategic priority is declining."
Members "expressed concern about their companies' financial performance and expectations regarding China's openness and business climate, contributing to a slightly more pessimistic outlook compared to previous years," the AmCham China Business Climate Survey said.
China’s economic growth missed forecasts in the second quarter of the year, adding to worries over surging youth unemployment and a weak property sector and raising the likelihood the government will double down on support for the faltering post COVID-19 recovery.
The Associated Press contributed information to this report.