SPRINGDALE, ARK. — True to its vow of controlling the controllables, Tyson Foods Inc.’s fiscal fourth quarter and year-end results reflected efforts to continuously improve operational performance, especially in its Poultry and Prepared Foods business segments. Unfortunately, the positive impact of those and other efforts to streamline and grow the company’s overall business was blunted by the industrywide headwind created by the shrinking cattle supply.  

With relatively flat sales for the fiscal fourth quarter ended Sept. 28, 2024, and the full year, ended Sept. 30, 2024, Tyson’s adjusted operating income (AOI) for the quarter improved to $525 million ($1.00 per share on the common stock versus a loss of $1.31 in the same period a year ago) compared to a loss of $463 million during Q4 of the previous year. AOI was $1.82 billion for the year, compared to $933 million in fiscal 2023 (or $2.25 per share on the common stock versus a loss of $1.87 the previous year). Sales for the quarter topped $13.56 billion, about 1.6% higher than the $13.35 billion during the 2023 fiscal fourth quarter. For the year, Tyson’s sales totaled $53.31 billion, just under 1% higher than the $52.88 billion posted in fiscal 2023.

“We’re clearly pleased with our performance this year, where a significant turnaround in Chicken, combined with strong results in Prepared Foods and improvements in Pork, offset well known challenges in Beef,” said Donnie King, president and chief executive officer of Tyson during a Nov. 12 conference call with financial analysts.

In the Chicken segment, quarterly sales increased by 2.3% over the previous year, from $4.15 billion in fiscal 2023 to $4.25 billion this year. Meanwhile operating income spiked to $356 million for the quarter and $1.02 billion for the year compared to $75 million in the year-ago quarter and a loss of $77 million for fiscal 2023.

Curt Calaway, chief financial officer, attributed the growth in the segment largely to Tyson’s ability to better align supply and demand.  

“Lower input costs, net of pass-through pricing and improved operational efficiencies and execution drove the growth,” he said.  “For the year, Chicken AOI improved by nearly $1.1 billion, leading to the strongest AOI performance since fiscal ‘17.

While the cattle cycle continues to be the beef industry’s bane, Tyson’s diverse protein portfolio helps ease the financial sting, according to Calaway.  

“Significant improvement in Chicken profitability was the largest driver of year-over-year growth for both the quarter and the full year with contributions from Prepared Foods and Pork offsetting declines in beef,” Calaway said.

Sales for the quarter and for the year in the Prepared Foods segment were relatively flat while operating income and margins reflected continued growth. For the quarter, segment sales dipped to $2.47 billion from the previous year’s $2.50 billion. Year-end sales increased just under 1% higher than the previous year, at $9.85 billion compared to $9.86 billion in fiscal 2023. However, Prepared Foods’ quarterly AOI of $205 million marked a 30% increase over the previous year’s $151 million. For the year, operating income grew nearly 2% to $905 million compared to $889 million in fiscal 2023.

“There is significant opportunity to drive profitability in Prepared Foods by operating with an increased level of discipline, increasing throughput and yield by performing the standards, eliminating waste, reducing complexity, and continuing to improve service levels,” King said.

Beef segment sales were higher for the quarter and for the year, at $5.26 billion and $20.48 billion respectively with volume increasing 3.7% for the quarter and 1.6% for the year. However, the company said compressed spread contributed to declines in profitability in the Beef business unit. Q4 operating income reflected a loss of $71 million for the quarter compared to AOI of $17 million during the same period of fiscal 2023. For the year, the operating income slumped to a $291 million loss compared to an AOI of $233 million in fiscal 2023.  

“Obviously, the current cattle cycle remains challenging as there are no clear signs of sustained herd rebuilding intentions,” King said.  “We will remain focused on the things we can control as we manage through it.”

In the Pork business segment, King said improved margins highlighted the company’s herd health and continued high demand for products. Sales of $1.44 billion for the quarter were a slight decline from the previous year’s sales of $1.49 billion. Volume for the quarter was up 3.2% and average prices declined by 6.9%. Sales for the year were $5.90 billion compared to $5.77 billion in fiscal 2023, an increase of 2.2%. Pork volume increased 3.8% while the average price declined by 0.7%.

King attributed the improvements made in the company’s fiscal 2024 financial health over the previous year to increased AOI and careful management of capital spending. The company’s quarterly capital expenditures over the past year have declined steadily from a high of $589 million in the first quarter of fiscal 2023 to $248 million in Q4 of fiscal 2024 (a total of just over $1.1 billion in 2024). In the coming year, Tyson expects capital spending in areas that include investments in profit improvement projects, maintenance and repairs to maintain at 2024 levels, at approximately $1.0-$1.2 billion compared to $1.94 billion invested in fiscal 2023.

The company also provided guidance for fiscal 2025, which reflected continued improvement halfway into next year, when sales are expected to be flat with a possible decrease of about 1%.

“It's important to note that our guidance at midpoint for prepared foods and chicken reflects AOI expectations of more than $2 billion combined,” King said.

Calaway added: “We expect volume growth in Chicken and Prepared Foods to be offset by lower fees and import volumes. However, total company AOI is expected to be between $1.8 and $2.2 billion, reflecting approximately 10% growth at the midpoint, driven by Prepared Foods and Chicken.

Other notable mentions during the call included King’s welcoming Kyle Narron as Tyson’s new group president of Prepared Foods. Melanie Boulden, chief growth officer, assumed the additional role leading Prepared Foods prior to Narron’s appointment.

Additionally, Wes Morris, group president of Poultry mentioned that Tyson’s highly automated, 325,000-square-foot poultry plant in Danville, Va., which opened in late 2023, and added five fully cooked lines in 2024 is operating at maximum capacity.

“That plant is actually sold out,” he said, adding that part of the fiscal 2025 plans include identifying opportunities for the next five fully cooked lines.  

One analyst posed a question about how the recent election of a new president could affect business in terms of labor, potential tariffs and regulatory changes, to which King said that Tyson has a history of succeeding under many administrations.
 
 “There’s a lot we don’t know at this point, but I would remind you that we’ve successfully operated this business for over 90 years,” he said, regardless of the party in control.  “We look forward to working with the incoming administration; like all businesses we’ll assess any new policies and plan accordingly.”