Farm Progress

The meat producer has slightly raised its earnings outlook for both the chicken and pork divisions in 2024.

Bloomberg, Content provider

February 5, 2024

3 Min Read
Tyson chicken nuggets at grocery stores

By Gerson Freitas Jr.

Tyson Foods Inc. posted quarterly earnings that beat even the highest of analysts’ estimates, with improving results from its chicken, pork and prepared food businesses more than offsetting losses at its beef operation. Shares surged. 

The result is a glimmer of good news for Tyson, which has been seeking to turn around its fortunes after seeing profits plunge to the lowest in more than a decade last year amid a highly unusual confluence of headwinds across all main protein markets. It also underscores the company’s ability to weather what’s expected to be a long losing streak for its beef business, which struggles with the lowest US cattle supplies in more than seven decades. 

Shares jumped as much as 8.6% — the biggest daily advance in almost two years — to the highest since May in New York trading before trimming gains. Through Friday’s close, the stock has climbed nearly 25% since reaching the lowest level in more than three years in October. 

The largest meat producer in America posted adjusted net income of 69 cents per share in its fiscal first quarter, down 19% from a year earlier, the company said Monday in a statement. That compares with a 42 cent average estimate from analysts.

“It was a promising start to the year for Tyson,” Chief Financial Officer John Tyson said in an interview. “We have been talking for multiple quarters now about our efforts to improve our operational performance, and this quarter was another quarter of going along with that story.”

Adjusted operating income for the meat giant’s chicken business rose to the highest since the fourth quarter of 2022, while pork operations snapped five straight quarters of losses. The unit that produces processed food under brands such as Wright and Jimmy Dean posted margins that exceeded analyst estimates, accounting for more than half of Tyson’s gains in the three-month period. Meanwhile, Tyson’s beef business reported a worse-than-expected loss, which was exacerbated by an inventory valuation charge following a sudden drop in cattle prices. 

Tyson has been reaping the benefits of “strategic moves” it took in 2023, including the shutdown of six chicken plants, as well as improved supply-demand dynamics in the market, the CFO said. The company has also taken advantage of better spreads in its pork business, which made it more economical to ramp up production, he added. 

The company is now happy with its current footprint while still “evaluating everything on a regular basis at all times,” Tyson said. 

The meat producer has slightly raised its earnings outlook for both the chicken and pork divisions in 2024. Still, the CFO anticipated lower income in the second fiscal quarter, which tends to be seasonally weaker for the company, amid impacts from severe winter conditions on the company’s operations. The executive also cited a demand pullback in some prepared food categories amid “mixed consumer behavior.” 

“We are 100% trending in the right direction, but our business is always going to experience some volatility and seasonality,” Tyson said. 

© 2024 Bloomberg L.P.

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