SPRINGDALE, ARK. – Tyson Foods Inc.’s executives continue to test new strategies to get the company back on a profitable track in fiscal 2023, with ongoing poultry business segment challenges remaining a focus and a priority to getting the company back on course. The company’s Aug. 7 announcement that it will close four more poultry processing plants was a prelude to it addressing the headwinds that have made 2023 less than prosperous across most of its business units. 

For the fiscal third quarter ended July 1, the company recorded a loss of $417 million, which was a sharp contrast with the same quarter the previous year when the company earned $750 million, equal to $2.14 per share on the common stock. The share price of Tyson Foods’ stock at the close of markets on Aug. 4, was $56.46 and dipped to $50.88 in morning trading on Aug. 7. 

Sales declined in the quarter to $13.14 billion, compared to $13.49 billion during the same period last year. 

Tyson’s Chicken segment reported an operating income loss of $314 million, compared to an income of $277 million during the same quarter of 2022. Sales of $4.21 billion were slightly lower than the previous year’s $4.37 billion. For the previous nine-month period, however, chicken sales topped $12.90 billion, an increase compared to the same period last year, at $12.34 billion.

“Market conditions in chicken are still challenged with commodity prices across most cuts remaining significantly lower compared to last year,” said Donnie King, president and chief executive officer, during an Aug. 7 conference call with analysts.

He pointed out, however that the company has taken action to improve operating income by $100 million, resulting in a sequential increase, resulting from closing two other poultry plants earlier this year and converting two other processing facilities to designated boneless operations. Tyson expects chicken production will decline 3.5% year on year driven by lower pricing, but partially offset by volume growth. 

“The decrease in pricing reflects the challenging commodity market,” King said.

King also addressed the company’s decision to backtrack on its “no antibiotics ever” labeling for Tyson branded chicken during the quarter, as it transitions to a “no antibiotics important for human medicine” policy. He said data suggests the use of ionophores can result in more uniform births and consistent bird weights. 

“In turn, we can more accurately forecast supply and demand, helping to meet the needs of our customers and consumers,” he said. “And I want to emphasize that we will continue to evaluate all options like these across all of our businesses.”

Based on US Department of Agriculture projections that chicken production will increase by 3% in fiscal 2023 compared to last year, Tyson’s forecasts adjusted operating margin of a loss of 1% to 1% for its fiscal year.  

In the Beef segment, Tyson reported operating income of $66 million in the quarter, down from $533 million in the same quarter last year. Sales in Q3 were flat at $4.956 billion compared to $4.959 billion in 2022, while volume declined by 5.3%.  

Industrywide herd liquidation is resulting in lower cattle supply, which is pushing prices higher and diminishing spreads and making export trade more challenging. 

“Beef is likely to continue to face headwinds, and we don’t expect the ongoing tightening of cattle supply and spread compression to abate until herd rebuilding is well underway,” King said.

Tyson’s Pork business reported an operating loss of $74 million in the quarter, compared to operating income of $25 million in 2022. Sales of $1.32 billion were slightly lower than last year’s $1.61 billion with volume and price declining 1.8% and 16.4% respectively. The company also felt the impact of a fire at its Madison, Neb., pork processing plant in April, which halted operations there through the beginning of May. 

“Revenue was down 18% driven primarily by lower pricing due to softer demand,” King said. “The operating loss of the quarter was $70 million, as spread compression continued to pressure our markets. This was exacerbated by market pressures in our live operations, lower exports, and the operational impact of a fire at our Madison facility.” 

Prepared Foods continues to be a bright spot for the company, with third-quarter operating income topping $206 million, compared to $186 million in the same quarter last year. Segment sales lagged slightly at $2.38 billion compared to $2.44 billion in 2022. Year-to-date sales are leading last year’s with $7.34 billion through the last nine months compared to $7.17 billion during the same time last year. 

Categorizing the segment as a growth pillar for the future, King said Prepared Foods delivered better-than-anticipated margins, at 8.6%, higher than any other business unit for the quarter and 1% higher than last year’s third quarter. 

“The [Prepared Foods] business performed well in Q3,” said King. “In retail, our core business line saw strong volume growth in the quarter and continued to gain pound and dollar share.”

He added: “I’m encouraged by the improvements we made this quarter, including our Tyson Core Business lines that continue to outpace our peers in volume growth.”

King highlighted some of Tyson’s new retail and foodservice products introduced during the fiscal year that show promise for the future. Among them were the frozen Tyson Original Chicken Breast Sandwich. Legacy brand Jimmy Dean recently launched its Biscuit Roll Ups at foodservice and Maple Grilled Cakes and Toaster Pop Ups in retail. Meanwhile, Tyson’s Hillshire Farm’s focus on healthy snacking has led to the launch of snack kits, that feature oven-roasted turkey breast, cheddar cheese and wheat crackers. 

“We launched these products at attractive price points and have already seen strong acceptance with major retail customers,” King said. 

One of the company’s innovations at foodservice is Hillshire’s cupping pepperoni product line, which Tyson has identified as an on-trend product across channels.    

Looking forward, Tyson is optimistic as it continues to focus its resources on efficiency and improved productivity.