Tyson Foods quarterly net income beats estimates, revenue up 2.3%

by Kim Souza ([email protected]) 249 views 

Springdale-based Tyson Foods on Monday (Feb. 3) reported net income of $359 million, well above $107 million a year ago. On an adjusted basis, the company reported net income at $1.14 per share, better than the consensus estimate of 88 cents.

Revenue totaled $13.723 billion, up 2.3% compared with the same period in the previous fiscal year. The fiscal first quarter for Tyson Foods ended Dec. 28.

“Fiscal year 2025 is off to a strong start, as we delivered our third consecutive quarter of year-over-year growth in sales, operating income and earnings per share,” said Tyson CEO Donnie King.

He said Tyson’s best quarterly performance in more than two years is partially linked to exceptional results with chicken and improved execution across the company.

“Consumers remain focused on adding protein to their diets, and our diversified multi-channel, multi-protein portfolio ensures we are well-positioned to meet this demand while reinforcing our leadership as a world-class food company,” King said.

He also announced the retirement of Wes Morris, group president of Tyson’s poultry business. King said he called Morris out of retirement three years ago to turn the chicken segment around and the end of that contact is near. Morris will transition back to retirement over the next three months and work with the new group president who has yet to be announced.

Tyson also raised its guidance for fiscal 2025. King said Tyson considered tariff risks when it lifted its annual adjusted operating income forecast range to between $1.9 billion and $2.3 billion, up from $1.8 billion to $2.2 billion expected earlier.

BIG CHICKEN
Tyson’s chicken segment was the star of the quarter, posting operating income of $368 million on an adjusted basis. The net operating margin was a record 9.1%, up from 4.5% in the year-ago period.

Chicken sales rose to $4.065 billion, up 1.5% on volume with prices down 0.7% from a year ago. Morris said in the earnings call with analysts that Tyson continued to benefit from better discipline in production by itself and in the industry. The U.S. Department of Agriculture (USDA) expects chicken production will increase by 2% this year. Tyson said it expects adjusted operating income between $1 billion to $1.3 billion for the year.

The chicken segment also benefited from lower corn and soybean meal costs and better restaurant and food service demand that is outpacing the industry, the company noted.

King was asked by analysts how immigration changes and tariffs could impact the business, and he said Tyson’s guidance takes into account those risks and others.

“Every person who works at Tyson is authorized to be here. We follow the law using the protocol and systems in place to fully verify prospective employees. … We don’t expect issues with having enough people to work in our facilities at this time,” he said.

President Donald Trump’s 25% tariffs on Canada and Mexico will likely impact trade with those countries. Morris said 3 billion pounds of chicken shipped to Mexico in the recent quarter were mostly machine-separated pieces and leg-quarters. Company execs said their sales teams are working to find other markets to mitigate the potential lost trade with Mexico. The Trump Administration on Monday put a one-month pause on the tariff with Mexico while the two countries work on immigration enforcement.

Tyson said any impact regarding trade tariffs with Canada will have less impact on Tyson’s chicken segment, with a bit more import concerns in the beef segment.

BEEF AND PORK NUMBERS
Tyson’s fresh meats business of beef and pork continue to work through industry challenges. The beef segment continues to suffer from compressed margins due to high live cattle costs and the smallest cattle herd in recent history. Tyson’s beef segment reported sales of $5.335 billion, up 5.6% on increased volumes and prices up 0.6% from a year ago. Tyson said ground beef demand has been strong in retail and in food service.

Brady Stewart, president of Tyson’s beef segment, said execution efficiencies and diversified business sectors in retail and food service are seeing solid demand. Operating losses were $64 million in the quarter, better than the $206 million operating loss reported a year ago. On an adjusted basis, operating losses narrowed to $32 million, compared to $117 million in segment losses a year ago.

The pork segment posted first-quarter sales of $1.617 billion, up 7% on price, but volumes were down 0.4%. Operating income was $59 million, improving from $39 million a year ago. USDA projects domestic production will increase by approximately 2% in fiscal 2025 compared to the prior year. Tyson anticipates adjusted operating income of $100 million to $200 million in fiscal 2025.

PREPARED FOOD, MARKET REACTION
Tyson’s prepared food segment did not outperform expectations in the quarter posting sales volume declines at 3.2%, with averaging pricing up 0.4%. Tyson said the higher cost of proteins and other ingredients compressed margins more than expected. Tyson expects the second half of the year to be stronger for the prepared foods segment,

The segment reported operating income of $209 million, down 14% from a year ago. On an adjusted basis, operating income declined 11.3% to $234 million in the quarter. Tyson expects adjusted operating income of $900 million to $1.1 billion in fiscal 2025.

Analysts were upbeat on Tyson’s fiscal first-quarter results. Stephens Inc. analyst Pooran Sharma said investors should feel encouraged by Tyson’s strong execution and its capacity to improve operations.

“We expect commodity chicken markets to have another strong year; however, we haven’t seen any clear signs of recovery (heifer retention) in beef. We have an (equal weight) EW-neutral rating on Tyson Foods shares,” Sharma said. “The target price of $60 is under review following the recent results.”

Shares of Tyson Foods (NYSE: TSN) traded higher on Monday. Shares opened at $57.42 rising to around $60 by 9 a.m. Over the past 52 weeks Tyson’s share price has ranged between $51.16 and $66.88. Year to date, shares are up 0.55%.