Tyson Foods (TSN -1.08%), a leading U.S. food company, delivered its fiscal 2024 fourth-quarter results on Nov. 12 that were much improved from the prior-year period. The company returned to profitability, with the most notable gains coming in the chicken and prepared foods segments, even as the company navigated challenges such as high raw material costs.
Adjusted earnings per share (EPS) rose 149% to $0.92 for the quarter, while total revenue grew 1.6% to $13.565 billion.
| Metric | Q4 2024 | Q4 2023 | % Change |
|---|---|---|---|
| Adjusted EPS | $0.92 | $0.37 | 149% |
| Total revenue | $13.565 billion | $13.140 billion | 1.6% |
| Operating income | $341 million | ($350 million) | N/A |
| Net income | $191 million | ($417 million) | N/A |
Understanding Tyson Foods
Tyson Foods, a prominent name in protein-based food, is renowned for its vertically integrated chicken segment. The company controls the entire supply chain from breeding to processing, giving it a greater ability to manage its operational efficiency. It's not limited to poultry, however. Tyson's business also encompasses the beef, pork, and prepared foods segments.
Recently, the company has sharpened its focus on boosting efficiency and innovation. Reducing raw material expenses and optimizing processing have been central to its strategy, especially in light of the recent fluctuations in its input costs. Raw material costs, primarily for livestock and feed grains, directly influence its profit margins.
In a competitive market landscape, maintaining robust customer relationships with major retailers such as Walmart is essential for revenue growth. Innovation has become crucial as consumer preferences evolve toward value-added and diverse protein products, driving Tyson to invest in new offerings that cater to these trends.
Quarterly Highlights
In the quarter, which ended Sept. 28, Tyson's chicken and prepared foods segments performed particularly well. The chicken segment delivered a remarkable turnaround, with adjusted operating income rising to $356 million from $75 million in the previous year, giving it an 8.4% operating margin.
NYSE: TSN
Key Data Points
This recovery was attributed to productivity enhancements across the supply chain and cost management initiatives that offset rising feed costs. The prepared foods segment also posted strong numbers with an adjusted operating income of $205 million for the quarter and a margin of 8.3%, demonstrating Tyson's prowess in value-added products.
The beef and pork segments did not fare as well. In the beef segment, Tyson reported an adjusted operating income loss of $71 million, citing high cattle costs and market volatility as influencing factors. The pork segment saw some improvement from the prior-year period's adjusted operating loss of $8 million; this time, it booked a modest $19 million in adjusted operating income; however, its margin of just 1.3% reflected challenges.
During the quarter, Tyson worked on streamlining its operations so that it could better weather input cost volatility and ensure sustained profitability. Though its international operations saw revenue and earnings drop due to strategic realignments, Tyson remained committed to its vertically integrated model.
Also this month, Tyson announced a 2% increase in its Class A common stock dividend to $0.50 per share quarterly.
Looking Ahead
For its fiscal 2025, Tyson Foods projects adjusted operating income of between $1.8 billion and $2.2 billion. Although sales are expected to remain flat or slightly decrease, the company's focus will remain on operational improvements and capital management to sustain profitability.
Investors should monitor Tyson's strategies to mitigate risks related to raw material costs and supply chain disruptions. Additionally, changes in consumer preferences are likely to drive Tyson's continued emphasis on innovative product development. Management's cautious optimism, reflected in its guidance, suggests a balance of risk management and investment in future growth opportunities.
