Tyson Foods (TSN, Financial) reported better-than-expected fourth-quarter results, driven by improvements in its chicken business and increased demand for prepared foods, offsetting declines in the beef sector. The company posted a 1.6% increase in net sales, reaching $13.57 billion, surpassing analysts' expectations of $13.43 billion. Adjusted earnings per share were $0.92, higher than the anticipated $0.71.
The company's adjusted operating income skyrocketed 117% year-over-year to $512 million, thanks to a strong performance in its chicken segment, which reversed from a $267 million loss in the previous year to an operating profit of $409 million. Lower costs from falling corn and soybean prices improved the profitability of its Jimmy Dean brand, aided by factory closures and cost-saving measures.
Consumer shifts towards cheaper beef alternatives have boosted chicken demand, Tyson's second-largest revenue source. However, profits remained under pressure due to a shortage of U.S. cattle, with no improvement expected until at least 2026. In Q4, Tyson's chicken sales grew by 2.3%, with a 0.2% price increase and a 0.7% decline in volume. Pork volume increased by 3.2%, though prices dropped by 6.9%, and beef volume grew by 3.7%.
Looking ahead, Tyson, the largest U.S. meat processor, anticipates adjusted operating income for fiscal 2025 to be between $1.8 billion and $2.2 billion, compared to $1.82 billion this year. However, revenue is expected to remain flat or decline by up to 1%, below the analysts' prediction of a 1.8% increase.
CEO Donnie King expressed confidence in the company’s improved profitability and future prospects for shareholder value. Additionally, Tyson announced a quarterly dividend increase to $0.50 per Class A share and $0.45 per Class B share, a 2% rise from the fiscal 2024 annual rate. According to the USDA forecast, Tyson expects U.S. domestic protein production to increase in the fiscal year 2025, with improved results from its overseas operations on an adjusted basis.
Following the earnings report, Tyson Foods' stock rose approximately 6% in pre-market trading.
