Tyson sees 2025 profit growth as chicken offsets beef losses

Overall profits are still severely constrained by a U.S. cattle shortage that isn’t expected to improve anytime soon.

Bloomberg, Content provider

November 12, 2024

2 Min Read
Semi truck with picture of chicken nuggets
Bloomberg

By Gerson Freitas Jr.

Tyson Foods Inc. surged the most in more than two years after beating fiscal fourth-quarter earnings estimates and projecting stronger results next year, with a turnaround in its chicken business offsetting losses in beef.

The maker of Jimmy Dean sausages now expects adjusted operating income to rise as much as 22% in fiscal 2025 compared to this year, according to an earnings statement on Tuesday. That’s slightly higher than analysts had estimated. Tyson also posted better-than-expected results in the three months ended Sept. 30.

Demand for chicken, Tyson’s second-largest source of revenue, has improved as consumers look for cheaper alternatives to beef. Plunging prices for corn and soybeans also made it cheaper to feed animals, while a series of factory shutdowns and other measures boosted cost savings.

Shares of the Springdale, Arkansas-based company led gains in the S&P 500 Index, climbing as much as much as 11% in New York trading. The stock is on track for its first annual gain in three years. 

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Tyson, the largest U.S. meat packer, expects adjusted operating income of $1.8 billion to $2.2 billion for fiscal 2025, up from $1.82 billion for the  year ended Sept. 28. The mid-point of the forecast is also slightly above Wall Street’s view. Growth will be mostly driven by the chicken and prepared foods businesses. 

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For the fourth quarter, the company posted earnings of 92 cents a share, excluding some items, exceeding even the highest of analyst estimates compiled by Bloomberg. Chicken accounted for almost 70% of Tyson’s profits in the period, with the bulk of the rest coming from prepared foods. Beef, the company’s largest business, posted a $71 million loss. 

“It’s clear that we’ve built a fundamentally stronger chicken business,” Chief Executive Officer Donnie King said during a conference call with analysts, citing improved bird fertility and health indicators. The unit posted its highest operating profit margin since 2018, according to data compiled by Bloomberg.

Overall profits are still severely constrained by a US. cattle shortage that isn’t expected to improve anytime soon. There are “no clear signs of sustained herd rebuilding planning,” King said. The company is focused on reducing costs and making the operation more efficient, “so that we are well prepared when the cycle turns,” he added.

(Updates with share price increase in first and fourth paragraphs; adds other details throughout.)

© 2024 Bloomberg L.P.

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