Aug 4 (Reuters) - Tyson Foods raised its annual revenue growth forecast and posted a better-than-expected third quarter on Monday, betting on resilient demand for meat products, especially chicken, sending its shares up about 4%.
Profit margins jumped in Tyson's chicken and prepared foods divisions during the quarter, while they worsened in its beef business — the largest product segment by sales.
Tight U.S. cattle supplies continue to force Tyson and other meatpackers to pay more money to buy livestock to slaughter into beef.
"The only soft spot in our business is the beef segment, with cattle availability at record lows," said Tyson CEO Donnie King.
The Springdale, Arkansas-based company has seen sustained demand for frozen meat and ready-to-eat food as consumers increasingly opt to cook meals at home in the face of growing uncertainties about tariffs and economic growth.
The Ball Park hotdogs maker expects fiscal 2025 revenue to grow between 2% and 3%, compared with its prior forecast of flat-to-up 1%.
"Chicken continues to provide support to the business as the company continues to face beef headwinds," brokerage Stephens said in a note.
Tyson expects its chicken business to earn an annual adjusted operating income of $1.3 billion to $1.4 billion, up from its previous forecast of $1 billion to $1.3 billion.
Its beef business is expected to lose $375 million to $475 million in fiscal 2025, compared with the previous loss estimate of $200 million to $400 million.
Volumes in Tyson's beef segment were down 3.1% during the quarter ended June 28, but sales grew 6.9% as prices jumped 10%.
The segment had an adjusted operating loss of $151 million, including a goodwill impairment charge of $343 million. That compares with losses of $69 million a year earlier.
Sales in the chicken segment rose 3.5%, with volumes up 2.4%.
The company's quarterly net sales rose 4% to $13.88 billion, beating analysts' estimate of $13.56 billion, according to data compiled by LSEG.
Tyson posted adjusted earnings per share of 91 cents, while the estimate was 78 cents.
Reporting by Neil J Kanatt in Bengaluru and Tom Polansek in Chicago; Editing by Shilpi Majumdar
Source: Reuters