Tyson raises outlook as lower costs boost chicken segment

Tyson Foods raised its 2024 earnings outlook after posting second-quarter profits that beat analyst estimates amid a rebound in the US meat industry.

Adjusted net income in the three months ended March 30 was 62 US cents a share, reversing a loss of 4 US cents a share a year earlier, Tyson said in a statement on Monday (May 6). That exceeded even the highest of analyst estimates compiled by Bloomberg. 

The largest US meat producer said it is now on a path to make US$1.4 billion to US$1.8 billion in operating income in fiscal 2024, up from a previous forecast range between US$1 billion and US$1.5 billion. Most of the additional gain is seen coming from its chicken business. The company has also trimmed the high end of its capital spending forecast range. 

Chicken producers, which last year struggled with surging costs and a supply glut, have generally benefited from lower prices for the grain used as feed and tighter meat inventories as demand improves. Tyson has also taken measures to streamline its operations, including the shutdown of six poultry facilities last year, as part of efforts to restore profitability. 

“The strategies we have implemented are delivering tangible results, as evidenced by our return to year-over-year bottom line growth,” chief executive officer Donnie King said in the earnings statement.

Most of Tyson’s second-quarter operating profits came from its prepared foods business, which encompasses most of the company’s branded, ready-to-eat offerings. Its beef unit, the company’s largest, reported a loss of US$34 million as the company continues to contend with tight cattle supplies in the US.  

Improved second-quarter results came even as sales slid 0.5 per cent from a year ago, slightly trailing analyst estimates. The company also saw a decline in both volumes and prices for chicken, and lower prices for prepared foods. Meanwhile, its beef and pork business benefited from an increase in both volumes and prices. BLOOMBERG