May 8, 2025

Tyson suffered worst slump since 2023 as losses in beef sales continued for sixth straight quarter

Tyson Foods Inc. slumped the most since 2023 as investors shrugged off stronger-than-expected quarterly earnings to focus on deepening losses at the company's beef business.

The meat processor lost money on beef sales for a sixth straight quarter as the company weathers a severe cattle shortage in the United States that is not expected to ease anytime soon. Shares lost as much as 10% in New York on May 5, erasing gains for the year.

Tyson is "managing through the most challenging beef environment we've ever seen," Tyson chief executive officer Donnie King said in a conference call with analysts. While company executives flagged early signs that ranchers are retaining more cows for procreation, a rebound in supplies may still take years to materialise.

Underscoring the difficulties faced by the industry, beef packers lost an average US$115.97 per head of cattle in the first three months of 2025, the most since at least 2014, according to estimates from HedgersEdge LLC, a risk management and market research firm.

The beef decline has increased Tyson's reliance on its chicken operation, which has benefited from cheaper supplies of grain used to feed birds and strong consumer demand. The unit saw adjusted operating income almost double in the fiscal second quarter, to the highest level in nine years for the period. The measure accounted for 60% of the company's total, up from less than 40% a year earlier.

But there are concerns that the recent boom in chicken may have run most of its course. Suppliers are taking steps to boost production, which may increase competition. Prices for corn — a key feed ingredient — have bounced back from last year's lows. Meanwhile, retaliatory tariffs by China are poised to hurt US chicken exports at a time when the US economy is slowing down.

Tyson said it will sell "multiple" smaller conventional cold storage warehouses for gross proceeds of as much US$300 million, and transition as an "anchor partner" into larger, fully automated facilities. The move is part of a broader effort to streamline operations and slash costs. The push included the shutdown of several processing facilities and the resumption of antibiotics use in birds.

Second-quarter earnings were 92 cents a share, 48% higher than a year earlier and above the 80-cent average of analyst estimates compiled by Bloomberg. The result excludes the impact of $343 million in legal contingency accruals, among other items.

Profits for Tyson's pork and prepared foods businesses inched higher in the quarter. Tyson also said it generated less free cash in the first six months of fiscal 2025 than a year earlier.

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