Tyson Foods’ chicken business helping to counter beef losses

Tyson Foods’ chicken business recorded about $680 million in adjusted operating income through the first half of this year. The Springdale-based global company will need those chicken dollars to counter deep losses in its beef segment.

Tyson CEO Donnie King said at Wednesday’s (May 14) BMO Global Farm to Market Conference in New York City that the company is on a good path for the back half of the year despite a few uncertainties.

King said two years ago the company had issues with bird hatch and higher mortality rates, which took time to fix. Plants are running well and more high-margin products are being produced and sold, helping plant performance overall, he said.

“We have aligned ourselves with strategic customers, and we are growing with them,” King said. “If you think about our growth, we had a second consecutive quarter of growth in our chicken business volume. We grew in the quarter and the year, top line, bottom line. That feels really good. But we’ve got more opportunities to grow. We’re looking to create greater capacity utilization, even though, based on what we’ve done, our assets are working harder and giving us a bump in the return on invested capital.”

King said Tyson continues to invest in innovation and a robust product pipeline while also “paying close attention to business fundamentals.”

Tyson has issued adjusted operating income guidance between $1 billion to $1.3 billion in its chicken segment for the fiscal year. However, the beef segment guidance is an operating income loss of between $200 million and $400 million. King said the company faces lower herd numbers, high live cattle prices and mixed consumer demand. He said the lower-price cuts of ground meat and middle meats are selling well as consumers stretch their grocery dollars.

Tyson continues to expand its line of higher-margin seasoned and marinated beef and pork products, and the higher margins with customer-convenience products help mitigate negative pricing issues in the national beef market. King pegs the cycle near the bottom and said it could take about 30 months for live cattle for slaughter to materially increase, which would help restore profitable margins in the beef segment.

The losses in beef are likely to continue into 2026, but King and Chief Financial Officer Curt Calaway said Tyson remains a good investment with its profitable chicken segment, a growing prepared foods business with annual operating income around $900 million, and a growing international business. Calaway said Tyson held some of its capital expenditures in recent years and worked to reduce debt when beef profits were high because they knew challenges were looming.

“We have used discipline in our cash management over the past 18 months. While we knew coming out of 2022 and 2023 that there would be a pullback from beef profitability, we have been running about eight quarters below our long-term leverage target of two times (debt to gross earnings). … We have been very intentional in our capital allocation priorities, which start with maintaining financial strength,” Calaway said.

Tyson reduced capital expenditure guidance by around $600 million since 2023, but is estimated between $1 billion to $1.2 billion in this fiscal year. King said spending this year and next is around supporting brands and product innovation.

Shares of Tyson Foods (NYSE: TSN) closed Wednesday at $54.50, down 86 cents. Shares are down 5.12% year to date. Over the past 52 weeks the shares have traded between $53.61 and $66.88.