Meatpacker lifts 2025 sales forecast on growing beef, chicken demand
- By Reuters -
- Feb 03, 2025
US meatpacker Tyson Foods raised its annual sales forecast on Monday as strong demand for beef and chicken helped it exceed first-quarter results estimates, boosting its shares by 7%.
The chicken nuggets and Ball Park hot dogs manufacturer has improved its poultry business after struggling to predict demand and shuttering plants that employed thousands of workers.
A gradual recovery in restaurant traffic is helping revive Tyson’s wholesale supply to fast-food and fine-dining chains, while sustained eat-at-home trends have supported demand.
However, it now faces threats from tariffs that U.S. President Donald Trump has imposed on Mexico, Canada and China, as well as tight supplies of U.S. cattle.
Despite this, Tyson lifted its annual adjusted operating income forecast range to between $1.9 billion and $2.3 billion, from $1.8 billion to $2.2 billion expected earlier, driven by low grain prices and efforts to cut costs.
Tyson, which benefits from relatively cheap costs for U.S. corn and soy used to feed chickens, now expects fiscal 2025 sales to be flat to up 1%, compared with flat to down 1%.
“Investors should feel encouraged with strong results posted in chicken,” Stephens analysts said.
Trump’s tariffs could help keep grain costs low by triggering retaliation that reduces global demand for U.S. crops, analysts said.
However, the duties could further increase record prices for cattle processed by Tyson because the U.S. imports livestock from Mexico and Canada. Tit-for-tat tariffs could also hurt export demand for Tyson’s pork and poultry, analysts said.
Sales in Tyson Foods beef unit, its biggest business, rose 6.2% in the first quarter ended Dec. 28. Prices rose 0.6% and sales volumes rose 5.6% as cattle are being raised to heavier weights.
Farmers are not starting to rebuild their herds by keeping female cows, known as heifers, on their ranches to reproduce, government data indicates.
“Heifer retention remains frustratingly low, which likely portends beef segment challenges for longer than expected,” JP Morgan analysts said.
Tyson’s net sales rose 2.3% to $13.62 billion in the quarter, compared with analysts’ estimates compiled by LSEG of $13.44 billion. On an adjusted basis, the company earned $1.14 per share, compared with estimates of 88 cents.