Tyson Foods net income, revenue beat estimates; beef segment loses money

Tyson Foods beat analyst estimates in its fiscal fourth-quarter with net income of $357 million, reversing a loss of $450 million a year ago. Adjusted earnings per share was 92 cents after charges from plant closures, better than the consensus estimates of 72 cents.

Revenue beat the estimate at $13.565 billion, up 1.6% from a year ago. For the full fiscal year, Tyson had per share net income of $3.10, up 131% from fiscal 2023. Revenue was $53.309 billion, up 0.8%.

With the ongoing challenges in the beef segment, the Springdale-based company provided a cautious forecast for fiscal 2025, which began Oct. 1. Tyson expects revenue to be flat or down 1% on the low end. Operating income is forecast to grow by 2% with capital expenditures reduced to $1.1 billion.

“We anticipate better results with adjusted operating income between $900 million to $1.1 billion and improving results from our foreign operations,” CEO Donnie King said during Tuesday’s (Nov. 12) earnings call with analysts.

The overall upbeat report sent shares soaring more than 10% in early trading on Tuesday. Tyson’s share price jumped more than $5 to open near $63 and rose to $64.69 in the first two hours of trading.

“We delivered significant improvement in profitability for the fourth quarter and full year. We also strengthened our financial position, with solid cash flow generation and a substantial reduction of our net leverage ratio,” King said.

CHICKEN AND PREPARED FOODS
Chicken was the shining star in the fourth quarter behind years of adjustments and internal measures to improve the core business. Adjusted opening income totaled $356 million, up from $75 million a year ago. Segment revenue totaled $4.251 billion, down 0.7% on volume amid 0.2% higher prices. Part of the weakness was in the restaurant business. The segment reported an operating margin of 8.4% in the quarter.

Overall, the chicken segment is performing well and Tyson expects its branded retail business with higher margins to lead to solid operating income between $1 billion to $1.2 billion in fiscal 2025.

The prepared foods segment had its best results since 2018. Adjusted operating income totaled $205 million in the quarter, up from $151 million a year ago. Operating margin was 8.3%. Sales revenue totaled $2.472 billion, down 1.4% on lower volume and flat overall pricing. King said the prepared foods segment would continue to gain momentum in 2025 behind operational improvements made in the past two years.

BEEF AND PORK
Beef is a huge business for Tyson Foods and challenges continue for the industry overall thanks to low herd numbers that reduce packer margins. Tyson said it will continue to control what it can and try to rely more on higher-margin beef products in retail shifting away from lower commodity products.

The beef segment had an adjusted operating loss of $71 million in the quarter, down from a $17 million gain reported a year ago. The segment reported a negative operating margin of 1.3% with no indication when it might turn positive. Beef sales were $5.261 billion, up 3.7% on volume and 0.9% higher prices.

The pork segment had an adjusted operating income of $19 million after accounting for a plant closure in Iowa. The operating margin was 1.3% on an adjusted basis. Revenue was $1.438 billion, up 3.2% on higher volumes with 6.9% lower prices.

INTERNATIONAL, ANALYST INPUT
Tyson’s international business had an adjusted operating income of $3 million, up from $1 million a year ago. Sales revenue was $609 million, up 1.3% on volume with 5.5% lower prices.

”Looking ahead, we are optimistic about our outlook and our ability to deliver long-term value to our shareholders. Our multi-protein, multi-channel portfolio, combined with our best-in-class team, iconic brands and focus on operational excellence positions us well for fiscal 2025 and beyond,” King said.

Gina Sanchez, chief market strategist at Chantico Global, said challenges in the beef segment outweigh the resiliency in chicken and prepared foods and won’t be enough to combat beef losses in 2025 and perhaps 2026. She has a “sell” rating on the stock.

Stephens Inc. is neutral on Tyson Foods. Analyst Pooran Sharma said he will sit it out until there is a more attractive price point to buy the stock or there is more clarity on improvement in the beef business.

Tyson Foods shares (NYSE: TSN) are up 19.73% year to date. In the past 52 weeks the share price has ranged between $45.38 and $66.88.