- Increased chicken demand offsets beef losses for Tyson Foods
- Tyson's net sales rise 5.1%, beating analyst estimates
- Beef unit reports $143 million loss due to soaring cattle costs
CHICAGO, Feb 2 (Reuters) - U.S. meatpacker Tyson Foods reported higher-than-expected quarterly earnings on Monday, as increased demand for its chicken products overshadowed hefty losses in its beef business.
Beef prices have climbed after ranchers slashed the size of the U.S. cattle herd due to a persistent drought that burned up pastures and hiked feeding costs, prompting some consumers to eat more lower-cost chicken instead.
The herd shrank to a 75-year low as of January 1, the U.S. Department of Agriculture said on Friday.
Although meatpackers benefit from rising beef prices, they have paid increased costs to buy cattle to slaughter. Tyson said its cattle costs climbed about $850 million in the quarter that ended on December 27, compared to a year earlier.
The Arkansas-based company's net sales rose 5.1% to $14.31 billion in the first quarter, beating the average analyst estimate of $14.09 billion. Its adjusted earnings per share of 97 cents topped expectations of 94 cents.
Shares were down slightly in premarket trading.
Sales in Tyson's chicken unit rose 3.7% for the quarter, though the segment's adjusted operating income slipped to $459 million from $471 million a year earlier.
Tyson said it anticipates operating income of $1.65 billion to $1.90 billion on an adjusted basis in fiscal 2026, up from a previous forecast of $1.25 billion to $1.5 billion.
For beef, sales volumes fell 7.3% as prices soared 17.2%. The unit reported an adjusted operating loss of $143 million, compared to income of $6 million a year earlier.
Tyson revised its projected loss for the beef business in fiscal 2026 to $250 million to $500 million, compared to its previous outlook for losses of $400 million to $600 million.
Retail prices for chicken legs in December were down about 3% from a year earlier at $1.73 per pound, according to the Bureau of Labor Statistics. By contrast, retail prices for ground beef reached a record $6.69 per pound in December, up 19% from a year earlier.
Tyson has said it is closing a major beef plant in Lexington, Nebraska, and reducing operations at a beef plant in Amarillo, Texas.
Reporting by Tom Polansek and Angela Christy M in Bengaluru; Editing by Maju Samuel and Sharon Singleton
Source: Reuters