Tyson Foods' stock turns lower after sales miss, as chicken remains weak

By Tomi Kilgore

Beef and pork see prices and volume rise, while chicken prices and volume both decline

Shares of Tyson Foods Inc. reversed course to trade sharply lower, after the meats company reported fiscal second-quarter sales that fell below expectations, as continued weakness in chicken and market-share losses offset a profit beat.

Within chicken, volume fell as production was cut to better align supply with demand, while pricing also fell due to lower input costs. And while market share turned "down modestly," Chief Executive Donnie King noted that was following a record performance a year ago.

The stock (TSN) had initially traded up as much as 2.4% in the premarket, and held gains until taking a dive as the opening bell range. The stock shed 7.6% in recent midday trading, putting it on track for the biggest one-day selloff since it tumbled 16.4% after quarterly results were reported on May 8, 2023.

For the quarter to March 30, the company, with food brands including Jimmy Dean, Tyson, Hillshire Farm and Ball Park, swung to a net income of $145 million, or 41 cents a share, from a loss of $97 million, or 28 cents a share, in the same period a year ago.

Excluding nonrecurring items, adjusted earnings per share of 62 cents beat the FactSet consensus of 39 cents.

The last time the company reported earnings that improved from the year before was the fiscal second quarter of 2022.

"Operational efficiencies and lower raw material costs drove solid profitability both in Q2 and the first half of 2024," said CEO King on the post-earnings call with analysts, according to an AlphaSense transcript.

Meanwhile, sales slipped 0.5% to $13.07 billion, below the FactSet consensus of $13.16 billion, to mark the sixth straight quarter of misses.

Beef sales grew 7.3% to $4.95 billion, pork sales rose 4.6% to $1.49 billion, and chicken sales declined 8.2% to $4.07 billion.

Prepared-foods sales were down 0.7% to $2.40 billion.

Overall prices increased 1% while volume declined 1.5%.

For beef, prices rose 4.5% and volume increased 2.8%, while pork sales prices edged up 1.7% and volume grew 2.9%.

For chicken, however, prices fell 2.1% and volume dropped 6.1%. That was the second straight quarter that both volume and price declined.

Prepared foods volume inched up 0.7%, but sales declined as prices fell 1.4%.

"Consumers' focus on value continues to impact our retail volumes," King said.

For fiscal 2024, Tyson kept its revenue growth outlook unchanged at "relatively flat." The U.S. Department of Agriculture continues to expect domestic protein production to increase slightly compared with fiscal 2023.

The stock has rallied gained 6.6% year to date, while the Consumer Staples Select Sector SPDR ETF (XLP) has tacked on 4.8% and the S&P 500 has advanced 8.1%.

-Tomi Kilgore

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05-06-24 1136ET

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