Tyson Foods' stock soars 4% after profit beat offsets fifth straight sales miss

By Ciara Linnane

Tyson's overall average prices rose 0.4% and volumes were flat

Tyson Foods Inc.'s stock soared 4% early Monday, after the meat processor and parent of food brands Tyson, Hillshire Farm, Jimmy Dean and Ball Park beat profit estimates for its fiscal first quarter, overshadowing a fifth straight sales miss.

The Springdale, Ark.-based company (TSN) posted net income of $107 million, or 30 cents a share, for the quarter to Dec. 30, down from $316 million, or 88 cents a share, in the same period a year earlier. Adjusted per-share earnings came to 69 cents, ahead of the 41-cent FactSet consensus.

Sales rose to $13.319 billion from $13.260 billion a year ago, just below the $13.338 billion FactSet consensus.

Chief Executive Donnie King said the company benefited from decisions made last year, which included announcing plans to shut down six chicken plants and two smaller facilities that handled packaged beef. In late December, Cal-Maine Foods said it would buy some of the Tyson plants and repurpose them for egg production, as Dow Jones Newswires reported.

"We are already seeing the benefits of these actions, and we'll continue to evaluate opportunities to drive efficiency across our segments," King told analysts on the company's earnings call, according to a FactSet transcript.

Overall, average prices rose 0.4% and volumes were flat. Those were an improvement from the prior quarter, when average prices declined 1.4% from a year earlier and volume was down 0.6%.

By segment, beef prices rose 10.5%, as volumes fell 4.1%, while sales rose to $5.023 billion from $4.723 billion a year ago. But the beef business had an adjusted operating loss of $117 million, after income of $129 million a year ago. Beef has been under pressure from shrinking herds after years of drought conditions that have made it more expensive to buy livestock.

Pork sales fell to $1.517 billion from $1.529 billion, as average prices fell 8.5% and volumes rose 7.7%.

Chicken sales fell to $4.033 billion from $4.263 billion as average prices fell 3.9% and volumes fell 1.5%. Prepared-foods sales rose to $2.453 billion from $2.538 billion as average prices fell 2.3% and volume rose 2.5%.

In the company's international business, prices fell an average of 7.1%, as volumes rose 2.2%. Sales fell to $582 million from $612 million.

Looking ahead, the Department of Agriculture is expecting domestic protein production - of beef, pork, chicken and turkey - to be slightly higher in fiscal 2024 versus levels from a year earlier, Tyson said.

The company said it expects sales to be "relatively flat" in fiscal 2024 versus the year earlier, while FactSet is expecting a decline.

"As it's still early in the new fiscal year and uncertainties remain, especially in our beef segment, we have made only modest changes to our outlook," Chief Financial Officer John Tyson said on the call. "Our focus for fiscal 2024 remains to manage the business for profit and cash dollar generation."

Still, the company is expecting the beef segment to post an adjusted operating loss of $400 million to breakeven in fiscal 2024. For pork, it expects adjusted operating income, or AOI, to range from breakeven to $100 million. And for chicken, it expects AOI of $500 million to $700 million.

Tyson expects to spend $1.0 billion to $1.5 billion on capital expenditure.

The stock has fallen 8% in the last 12 months, while the S&P 500 has gained 19.9%.

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-Ciara Linnane

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02-05-24 1040ET

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