Tyson Foods net income up 48%, revenue misses the estimate

It was a mixed second quarter for Tyson Foods, which saw net income of $380 million, and adjusted earnings of 92 cents per share, up 48.38% from a year ago. Adjusted net income beat the consensus estimate of 83 cents per share, or $296 million.

The Springdale-based meat giant also reported lower-than-expected revenue for the quarter ended March 31 of $13.074 billion, flat against a year ago, and missing the $13.17 billion consensus estimate.

For the first half of this fiscal year, revenue topped $26.697 billion, up 1.2% from the prior year. Tyson said legal contingency accruals reduced sales by $343 million, or 1.3%. Operating income totaled $680 million, up 25% from the prior year. Adjusted operating income was $1.174 billion, up 44% year over year. Adjusted earnings per share are up 57% to $2.06 per share from a year ago.

“We delivered another solid quarter with growth in both sales and adjusted operating income, driven by strong execution across the business. Our consistent focus on operational excellence, winning with customers and consumers, leveraging data and digital, and enhancing our financial strength has resulted in four consecutive quarters of year-over-year improvements in our top and adjusted bottom lines,” Donnie King, president and CEO of Tyson Foods, said in the report.

King told analysts that the company expects Trump Administration tariffs may lead to sales disruptions, but said overall exports account for less than 10% of Tyson’s business.

Shares of Tyson Foods (NYSE: TSN) were down more than 9% to $54.99 in the morning session. Shares had recovered some of the losses trading at $56.56, down 7.97% by noon. For the past 52 weeks the share price has traded between $53.61 and $66.88. Year to date the share price is down 4.7%.

Tyson’s challenged beef business recorded an adjusted quarterly loss of $149 million, wider than the $34 million lost a year ago. The adjusted operating income does not account for the $93 million Tyson has set aside for legal contingencies regarding price-fixing litigation.

Beef prices continue to climb amid lower herd numbers, which has created a tight cattle supply and compressed margins for packers like Tyson Foods. Market watchers expect the negative trends to continue. Beef sales totaled $5.196 billion, up from $4.954 billion a year ago. Sales volume was down 1.4% but prices rose 8.2% in the year over year period. Tyson said it expects an adjusted operating loss between $400 million and $200 million for the fiscal year ending Oct. 1.

Pooran Sharma, an analyst with Stephens Inc., said the beef losses were deeper than expected, which is concerning especially since slaughter numbers are high with ongoing herd liquidation resulting in fewer calves in the supply pipeline. For that reason, he remains neutral on Tyson Foods.

The brighter spot for Tyson Foods is the chicken segment that continues to benefit from higher consumer demand. Tyson reported chicken sales of $4.141 billion, up from $4.065 billion a year ago. Tyson sold 3% more chicken, but prices were down 1.1% from a year ago.

Adjusted operating income totaled $312 million for the chicken segment, up from $160 million a year ago. Operating margins improved to 7.5% from 3.4% a year ago. The U.S. Department of Agriculture (USDA) projects chicken production will increase approximately 2% in fiscal 2025 as compared with fiscal 2024. Tyson anticipates adjusted operating income of $1 billion to $1.3 billion for fiscal 2025.

Sharma said Tyson’s chicken segment continues to show resilience amid stronger operating metrics, but it’s not enough to overcome the beef challenges.

Tyson’s prepared foods segment reported adjusted operating income of $244 million, up from $233 million a year ago. The operating margin improved to 10.2% from 9.7%. Total sales were $2.396 billion, down 2.6% on volume but up 2.3% on price. Tyson expects adjusted operating income between $900 million and $1.1 billion in fiscal 2025.

The pork segment also underperformed expectations in the quarter. Adjusted operating income was $55 million, up from $33 million a year ago. But this does not include $250 million set aside for legal contingencies regarding price-fixing litigation. Pork sales totaled $1.244 billion, down 3.8% on volume and up 4.3% on price. The USDA projects domestic production will increase slightly in fiscal 2025 as compared with fiscal 2024, and Tyson said it expects adjusted operating income of $100 million to $200 million in fiscal 2025.

Tyson Foods’ international business reported adjusted operating income of $53 million, up from $14 million a year ago. Revenue was $566 million, down from $580 million a year ago. Prices fell slightly, with volume sales down 1.5% from the year-ago period.

Tyson also reported that it reduced debt by $738 million in the period.