Employees of the Tyson Fresh Meats plant near Holcomb will be getting a big one-time bonus in the wake of strong company revenues in FY 2017 and the first quarter of FY 2018, and significant projected savings resultant of the Republican tax reform enacted in December.
A company announcement issued on Thursday notes that the corporate tax cut is projected to give Tyson an adjusted corporate income tax rate of approximately 24 percent in FY 2018 and 25 percent in 2019, resulting in additional revenues of $300 million in FY 2018.
With the additional cash flow in mind, Tyson has promised to invest in its frontline employees for sustainable business growth and has announced a commitment to contribute more than $100 million in one-time cash bonuses for eligible employees in the second quarter of FY 2018.
“At Tyson Foods, we’re creating a modern food company focused on protein,” Tom Hayes, Tyson Foods president and CEO, said in the statement. “Building on our momentum from a record year in fiscal ’17, we’re off to a strong fiscal ’18. We delivered record adjusted EPS and our second-strongest quarter of operating income in Q1, with operating cash flows of more than $1.1 billion.”
Hayes noted that strong results were generated through each of the company’s segments, including beef, pork, chicken and prepared foods.
“As we look to the long-term [sic], we’re confident in our ability to continue growing the business,” Hayes said. “Demand for protein continues to rise, and we’re well-positioned to take advantage of that opportunity — and to fulfill our aspiration of sustainably feeding the world.”
With the company’s debt reportedly reduced by more than $500 million and $37 million realized in Financial Fitness Program cost savings, Hayes said in a separate message to employees that the $300 million in savings will result in a significant one-time bonus to more than 100,000 Tyson employees.
Eligible employees’ compensation does not already include an annual bonus, and eligible full-time employees will receive $1,000, while eligible part-time employees will receive $500.
According to the most recent estimates by the Finney County Economic Development Corp., Holcomb’s Tyson plant employs approximately 3,200 employees. A spokesperson from Tyson’s corporate office declined to note how many employees at the Holcomb plant would receive the bonus, but did say that about 5,700 people are employed at Tyson’s six Kansas locations.
The bonuses are just one component of Tyson’s plan to utilize savings resultant of the corporate tax cuts. Hayes noted that the company also intends to focus funds on innovation, as well as training, education and development opportunities for employees.
As an example of future changes, Hayes said the company will invest in its Upward Academy program, an initiative intended to help new employees with life skills, including ESL and GED classes.
According to Hayes, Tyson also will accelerate capital projects that strengthen the company’s operations and plant communities around the country.
As part of that investment, Hayes says Tyson will amplify its sustainability and animal well-being initiatives, shrink its environmental footprint, protect animals in its care and give the world’s growing population greater access to sustainable food.
“We believe this plan makes the most of the opportunity in front of us and will accelerate the significant progress we’ve already made across the business,” Hayes said in his public message to employees. “Thank you for everything you’ve already done, and everything you will do, to contribute to our success. When it comes down to it, I’ve never been more confident in our ability to raise the world’s expectations for how much good food can do.”
Trump’s new tax plan cuts the corporate income tax rate from 35 percent to 21 percent and repeals the 20 percent corporate alternative minimum tax. Among other significant benefits, the tax reform also exempts U.S. corporations from U.S. taxes on the bulk of new foreign profits, ending a global system of taxing the profits of all corporations based in the U.S., regardless of where those profits are earned.
Contact Mark Minton at mminton@gctelegram.com.