Tyson Foods reports fiscal year loss of $648 million

Tyson Foods on Monday (Nov. 13) reported an income loss in fiscal year 2023 of $648 million, well below the $3.238 billion of net income in fiscal 2022. Annual revenue was also lower at $52.881 billion, dipping 0.75% from the prior year.

For 2024, Tyson Foods said it expects revenue to remain flat in the $52.8 billion range, well below the $57.37 billion analysts had projected. Company executives said they expect better results in chicken and prepared foods with comparable results in pork and continued challenges in the beef segment during fiscal 2024.

“While economic headwinds persist, we are moving in the right direction and managing what we can control,” Tyson Foods President and CEO Donnie King said in prepared remarks. “The decisions we have taken have made us more operationally efficient and aided a second quarter of sequential improvement in adjusted operating income. The strategy and leadership team we have in place will allow us to take advantage of the long-term opportunities in front of us and drive shareholder value.”

Tyson Foods reported a fourth-quarter per share net income loss of $1.31, down 187% from the prior-year period. On an adjusted basis, Tyson’s net earnings per share were 37 cents for the quarter, down 77% from a year ago but better than the consensus estimate of 28 cents.

Fourth-quarter revenue was also down 2.8% to $13.348 billion on lower chicken and pork prices and softer demand for beef, the company said. Tyson said higher food prices and rising interest rates are pressuring household budgets, and some Americans are cutting back on higher-priced meats like beef. Tyson said its beef business saw sales volume fall 6.7% in the fiscal fourth quarter as prices rose by 10.2%.

King said the beef cycle is typically 10 years, and the industry is now in the rebuilding phase coming off of record high margins just two years ago. Tyson expects cattle prices to remain high and said it will continue to look for ways to find cost savings in that business, like eradicating redundant capacity in older plants. In the quarter, Tyson’s beef segment reported operating losses of $323 million, down 186% from a year ago. The adjusted operating income totaled $17 million, down 95% year over year. Tyson expects its beef business will have an adjusted operating loss between $400 million in the next fiscal year.

King said Tyson’s chicken segment is performing better than the losses would indicate. The segment lost $267 million in the quarter, down from $340 million in operating income reported a year ago. The adjusted operating income for the segment was $75 million, down from $337 million a year ago. Tyson said the adjusted operating income did not include $118 million the segment sustained in lower chicken sales.

King said the chicken segment is performing better, but the drag on profits from six plant closures will pressure results through the first quarter of 2024. The segment’s sales totaled $4.155 billion, up 1.7% in volume and down 9.2% in price.

Tyson’s pork business also saw weaker sales in the fourth quarter at $1.494 billion, down from $1.604 billion a year ago. Volume was down slightly, but prices were off 6.7%  year over year. King said Tyson’s pork business continues to work with the prepared foods business for ways to push more raw materials into that segment to create higher-margin products.

The pork segment reported narrower operating losses of $11 million with slightly improving margins in the quarter. Adjusted operating losses totaled $8 million for the quarter, better than the $50 million losses reported a year ago.

Tyson’s prepared foods segment also underperformed expectations in the quarter with sales of $2,502 billion, up 1% on volume but down 1.6% on pricing discounts related to more retail competition. The segment was the top-performing business in Tyson’s portfolio with operating income of $118 million, up from $111 million last year. On an adjusted basis, operating income totaled $151 million, up from $147 million reported in the same period last year.

Tyson’s international business reported sales of $636 million, down from $638 million reported a year ago. Volumes were up 4.9%, but prices fell 5.2%. The segment reported operating income of $20 million, reversing a loss of $5 million a year ago.

Capital expenditures are being pulled back to more historical levels between $1 billion and $1.5 billion for fiscal 2024. The company recently raised its annual dividend rate for fiscal 2024 to $1.96 per share, up 2% over the 2023 level.

Shares of Tyson Foods (NYSE: TSN) drifted lower on Monday following the company’s weaker-than-expected revenue forecast and continued challenges in beef. Shares were trading at $46.20, down 1.6% in heavy volume. Over the past 52 weeks, the shares have traded between $44.94 and $68.76.