Net income down 76.7% for Tyson Foods, revenue up 5.1%

Tyson Foods first-quarter net income dropped 76.7% before adjustments for beef segment restructuring and lawsuit-related costs in the beef chicken and pork segments.

Net income before adjustments totaled $85 million, down from $366 million a year ago. After adjustments, net income per share increased to 97 cents per share, down 15% year over year. Adjusted earnings per share beat the consensus of 95 cents.

Revenue topped estimates at $14.313 billion, up 5.1% from the prior year. Higher beef prices led to gains in revenue for the quarter ended Dec. 27. Analysts had forecast sales revenue of $14 billion for the quarter.

“Our first quarter results reflect solid execution across our portfolio,” Donnie King, Tyson president and CEO, said in the earnings release. “Prepared Foods delivered top and bottom-line growth while Chicken reported its fifth consecutive quarter of year-over-year volume gains. As protein demand continues to increase, our consistent share gains demonstrate we are well-positioned to capture this momentum. I’m encouraged by the progress we’ve made and confident we will drive continued improvement across the controllable aspects of our business in fiscal 2026.”

Operating income before adjustments totaled $302 million, down 48% from the year-ago period. On an adjusted basis, operating income topped $572 million, up 13% year over year. The company achieved an adjusted operating margin of 4% in the quarter.

The company reduced debt by $468 million in the quarter, with $4.5 billion in liquidity at year end. Free cash flow was $70 million lower than the prior year, because of the challenges in the beef segment.

Tyson Foods will hold its annual shareholder meeting in Springdale on Thursday, Feb. 5, celebrating 90 years as a business, with the past 63 years being publicly traded.

SEGMENT PERFORMANCE
Tyson made changes to how it reports its segment results, factoring out the fixed costs to show the truer picture of each segment. King said this change was made to offer more transparency into the segment performance by removing the fixed corporate costs.

The beef segment reported a net operating loss of $319 million, compared to a $26 million loss a year ago. After adjustments for a plant closure, shift reductions, and legal contingencies, the segment’s operating loss was $143 million, compared to $6 million of income a year ago.

Beef sales totaled $5.771 billion in the quarter, up compared to $5.335 billion a year ago. Beef prices increased 17.2%, and the volume of beef sold declined 7.3%, Tyson said.

The pork segment had a net operating income of $50 million in the quarter, down from $73 million a year ago. After adjustments, operating income improved to $111 million, up 53% from a year ago. Pork sales totaled $1.609 billion, compared to $1.617 billion a year ago. Pork prices increased 1.6%, and the volume sold was also up 1.6% from a year ago.

The chicken business returned a net operating income of $450 million, down from $460 million a year ago, due to weakness in the large-bird segment that is primarily sold into restaurants. On an adjusted basis after legal costs, operating income totaled $459 million, down from $471 million a year ago. Chicken sales totaled $4.212 billion, up compared to $4.065 million a year ago. Chicken prices were flat, and the volume sold was up 3.7% from a year ago.

The prepared food segment had net operating income of $322 million, up from $297 million a year ago. On an adjusted basis, net operating income was $388 million, up 20% from a year ago. Prepared foods segment sales totaled $2.673 billion, up from $2.473 billion a year ago. Average prices increased 7.9%, and sales volume was up 0.2% from a year ago. This segment’s strong results were led by growth in Hillshire Brands deli meats and the Jimmy Dean branded bacon.

Tyson’s international business had sales of $582 million, down from $584 million a year ago. Prices were up 0.5%, and total volume sold was down 0.8% year over year.

“This quarter’s performance comes as a surprise given higher-than-expected input costs for prepared foods and weaker fundamentals in big bird chicken,” said Pooran Sharma, an analyst with Stephens Inc. “With that being said, we think this performance demonstrates Tyson Foods’ resilience amid choppy industry fundamentals. … We remain neutral on Tyson Foods shares and our target price is under review.” (Stephens Inc. provides investment banking services for Tyson Foods on occasion and is compensated accordingly.)

BUSINESS FORECAST
King said Tyson’s business is strong despite ongoing challenges in beef. He said protein consumption is up and that is a positive for Tyson Foods, which already accounts for 1 out of every 5 pounds of protein consumed in the U.S.

The U.S. Department of Agriculture (USDA) expects beef production to decrease about 2% this year, and Tyson anticipates a beef operating segment loss between $250 million and $500 million the upcoming fiscal year, on an adjusted basis.

The USDA expects pork production to increase 2% this year, and Tyson said its operating segment income is forecast between $250 million and $300 million for the year.

U.S. chicken production is expected to increase 1% this year, according to the USDA. Tyson said it projects operating income of $1.65 billion to $1.9 billion for the year. The prepared foods segment is expected to post operating income between $1.25 billion and $1.35 billion for the year. The international business is expected to generate operating income between $150 million and $200 million in fiscal 2026.

Tyson forecast total operating income for the company between $2.1 billion and $2.3 billion for the year, with revenue growth between 2% and 4% compared to 2025. The company plans capital expenditures of up to $1 billion this year, with investments including projects to improve profits and maintenance and repair.

Shares of Tyson Foods (NYSE: TSN) opened at $63.89 on Monday, and were trading higher in the morning session. Over the past 52 weeks, the share price has ranged between $50.56 and $65.96.