Tyson Foods Posts $97 Million Quarterly Loss, Reduces Earnings Guidance

By Kim Souza

Tyson Foods reported a second fiscal quarter net income loss of $97 million on Monday (May 8), a wide swing from net income of $829 million in the same quarter last year. Revenue was $13.133 billion, up from $13.117 billion a year ago, but $600 million less than the consensus estimate.

After one-time adjustments for restructuring and plant closures, the net loss per share was 4 cents, down from $2.28 earned a year ago. Tyson fell way short of the 80 cents per share consensus estimate. The earnings miss in the quarter ending March 31 and weaker guidance for fiscal 2023 by Tyson Foods sent the stock tumbling more than 15% in heavy trading Monday morning after the earnings report was posted.

“While the current protein market is challenging, we have a strong growth strategy in place and are bullish on our long-term outlook,” said Donnie King, president and CEO of Tyson Foods. “We saw strong performance in our branded foods business and continue to be laser-focused on meeting customer needs and planning the future with them.”

King said this is not the first time Tyson Foods has seen weak macro-fundamentals, and the company’s strategy will allow for successful and continued growth in the years to come. King said he has never seen all three of the meat segments experience challenges this deep at the same time. But he remains positive about his management’s team turning the ship around.

“I am optimistic that we have people and plan in place to come out of this challenging environment stronger than ever,” King said.

But that turnaround won’t be this year. Tyson Foods reduced margin and profit guidance for the back half of the year due to deteriorating beef processing fundamentals amid higher live cattle costs, weaker exports and softening demand, which makes passing through higher prices problematic. Also, more pork losses partially offset by slowly improving chicken business and sustained strength in the prepared foods segment were part of the fiscal-year forecast.

On an adjusted basis, Tyson’s beef segment had an operating income of $8 million, down from $638 million a year ago. The company’s cash cow suffered from margin deterioration to 0.2% in the quarter, down from a record 12.7% a year ago. Tyson said the beef segment is expected to see margin compression the rest of this year between -1% and 1% based on higher live cattle prices. Tyson’s beef sales totaled $4.617 billion in the quarter, down from $5.034 billion a year ago. Volume was down 2.9%, and prices fell 5.4%.