Dive Brief:
- Tyson Foods finished its fiscal year strong as improvements in the chicken business offset ongoing beef headwinds.
- Sales climbed 2% to $13.6 billion in the fourth quarter over last year, driven by strong demand for beef and chicken products over the summer. Operating income reached $525 million due in part to lower feed costs and greater efficiencies in the chicken business.
- The Arkansas-based meatpacker also saw improvements in its pork and prepared foods businesses, though cattle supply issues continue to hurt profitability in beef. CEO Donnie King said in an investor call that Tyson’s growing momentum in value-added foods should help stabilize earnings moving forward.
Dive Insight:
Throughout fiscal 2024, Tyson sought to improve hatchability and mortality rates while streamlining its production and mitigating volatile input prices for its chicken business, which has appealed to cost-conscious consumers amid higher grocery prices.
Operating income from chicken reached $409 million in the fourth quarter, a 68% jump from the previous quarter and more than double what the results were earlier this year. This had a positive effect on adjusted operating income for the entire business, which was the highest it’s been over the past eight quarters and more than double Q4’s results from last year.
“When our live operations are running well and our demand plan is more accurate, we can operate much more efficiently while better servicing our customers and reducing inventory, all in support of generating more stable and predictable results,” King said.
King also noted Tyson is exploring where to break ground on its next highly-automated processing facility. Last year, the company ramped up its $300 million plant in Danville, Virginia to grow its value-added chicken products. The company recently launched its Spicy Chicken Honey Biscuits to capture customer preferences for spicy foods.
Despite challenges from the current cattle cycle, King said Tyson is focused on building a “best-in-class” operation next year in preparation for when heifer retention starts and the cycle turns. A tighter supply of U.S. beef cattle has forced prices higher, compressing company margins and resulting in years of segment losses despite strong demand.
“We are a leader in beef, and we want to be a valued partner for our customers by having the right product at the right time to meet their needs,” he said.
