NEW YORK (Reuters): Tyson Foods beat market expectations for first-quarter revenue and profit on Monday, sending shares to a nine-month high as the meatpacker said cost-cutting decisions to shutter U.S. chicken plants were paying off.
Shares pared gains and were up about 3% in midday trading.
Tyson, the biggest U.S. meat company by sales, closed five chicken processing plants over the past year and two facilities where workers cut and packaged beef. It expects to shut another chicken plant this year, after previously slating it for closure.
More shutdowns are still possible, Tyson Chief Financial Officer John R. Tyson said in an interview.
“Achieving a great result in Q1 and our business results influence our thinking. But we continue to evaluate all options,” he said.
Tyson’s overall adjusted operating income fell 9.2% in the first quarter ended Dec. 30.
Adjusted income in the chicken business climbed by almost 150% from a year earlier to $192 million. The company’s average chicken prices dropped about 4% while sales volumes declined 1.5%, after the company grappled with excess supplies last year.
“We are realizing the results of getting our footprint where we want it to be,” John R. Tyson said.
Executives said on a conference call that they also saw improvements in the number of chickens hatching and surviving, after the company resumed the use of certain antibiotics on farms last year.
Tyson’s largest unit, its beef business, posted an adjusted operating loss of $117 million in the quarter, compared with earnings of $129 million a year earlier. The company recorded an inventory loss of about $56 million linked to a rapid decline in cattle futures, executives said.
Sales in the beef segment were up 6.3%, backed by prices that jumped 10.5%. Volumes slid 4.1%.
Inflation-weary consumers reined in spending on expensive beef in 2023, and Tyson said protein demand remains uncertain. Beef prices soared after ranchers slashed cattle herds because a drought reduced the amount of land available for grazing.
“The beef segment margin was slightly disappointing, though not enough to offset healthy results elsewhere,” JPMorgan analyst Ken Goldman said.
Volume in Tyson’s pork business was up 7.7% from a year earlier, while prices sank 8.5% amid plentiful hog supplies.
The company posted adjusted earnings of 69 cents per share, compared with analysts’ estimates of 41 cents. Net sales rose 0.4% to $13.32 billion, beating analysts’ estimates of $13.27 billion, based on LSEG data.
