Tyson Foods Posts $97M Loss in Fiscal Q2

Tyson Foods Posts $97M Loss in Fiscal Q2
Tyson Foods CEO Donnie King (Tyson Foods)

Tyson Foods Inc. of Springdale (NYSE: TSN) on Monday reported an income loss of $97 million for the second quarter of fiscal 2023.

It's the company's first quarterly loss since 2009, a significant reversal from the $829 million in profit that Tyson reported in the same quarter a year ago. On a per-share basis, the loss came to 28 cents, down from a profit of $2.28 per share a year ago.

The performance surprised Wall Street, with analysts polled by Zacks Investment Research predicting a profit of 81 cents per share.

Revenue in the second quarter was $13.13 billion, a small increase from $13.12 billion a year ago and below Wall Street's estimate of $13.6 billion.

Tyson revised its 2023 revenue outlook down from $55 billion-$57 billion to $53 billion-$54 billion.

The news was received poorly by investors. Shares of the company were down about 16% midday Tuesday. For the year to date, shares were down about 20%.

"While the current protein market is challenging, we have a strong growth strategy in place and are bullish on our long-term outlook,” Tyson Foods CEO Donnie King said. “We saw strong performance in our branded foods business and continue to be laser-focused on meeting customer needs and planning the future with them.

“Through our growth strategy, focus on margin improvement, and proven leadership team, I am confident in our ability to capture the opportunities in front of us and create long-term value for customers, team members, and shareholders.”

King said the tough economic environment was a “highly unusual situation” because all three of the company’s main segments — beef, chicken and pork — had the same market stresses at the same time. Lower demand and decreased value of individual protein cutouts were exacerbated by higher costs caused by inflation.

John R. Tyson, the company’s CFO, said the challenging market conditions would probably continue through the end of the year. King said Tyson Foods was focused on dealing with the variables it can control with a long-term view for growth.

“I would say this quarter was not a surprise to us,” King said. “We knew Q2 was going to be challenging and it was. I've talked about the fact that I've never seen this highly unusual situation where Beef, Pork and Chicken were all experiencing challenges at the same time. Many of these are macro in nature.”

The beef segment reported sales of $4.6 billion, down from more than $5 billion a year ago. The company reported no operating income, which had been $638 million a year ago.

The chicken segment reported sales of $4.4 billion, up from $4.1 billion. Operating income was a loss of $258 million, down from a positive $198 million.

The prepared foods segment reported sales of $2.4 billion, up from $2.39 billion. Operating income was $241 million, down from $263 million.

The pork segment reported sales of $1.4 billion, down from $1.6 billion. Operating income was a loss of $33 million, down from a positive $59 million.

The international segment reported sales of $639 million, up from $565 million. Operating income was $1 million, up from a loss of $2 million.

“Tyson is an iconic company with a broad portfolio of products and powerful brands that has been a recognized leader in protein for nearly 90 years,” King said. “We've been through market cycles before. I've been through them before myself and we've always come out stronger on the other side. We have the right strategy, seasoned leadership and team members in place to do it once again. Our vision is to deliver sustainable top line growth and margin improvement.”

Tyson Foods has announced several cost-cutting measures in the past months. In April it said it would eliminate 15% of the company’s leadership positions and 10% of its corporate roles.

The previous month, it announced it would close poultry plants in Van Buren and Glen Allen, Virginia. The plants employed more than 1,600 workers.

In October, Tyson Foods announced its OneTyson initiative to bring 1,000 executives from satellite offices in the Chicago area and South Dakota to Springdale. Most of the executives, as many as 90% of the Chicago offices according to The Wall Street Journal, declined to relocated.

The Associated Press contributed information to this report.

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