Tyson Foods beats quarterly profit estimates on chicken demand

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 set record highs after ranchers slashed the size of the U.S. cattle herd to a 75-year low due to a persistent drought that burned up pastures and hiked feeding costs. 

Though demand has remained largely resilient, high prices have pushed some consumers to eat more lower-cost chicken instead. The shift has limited demand for beef amid mounting anxiety over a sluggish labor market and a slump in U.S. consumer confidence.

U.S. cattle supplies are expected to remain tight in 2026 and 2027, benefiting demand for chicken, Tyson CEO Donnie King told analysts on a call.

President Donald Trump has faced pressure to address the issue of affordability and pledged to lower beef prices in October. Still, steaks and hamburger meat have become more expensive.

BEEF PRICES RISE TO RECORD IN DECEMBER

Retail prices for chicken legs in December were down about 3% from a year earlier at $1.73 per pound, while ground beef prices were up 19% at a record $6.69 per pound, according to the Bureau of Labor Statistics.

In a note, Raymond James said it could be premature to expect that beef prices have peaked due to limited signs that ranchers are starting to rebuild the herd.

Meatpackers benefit from rising prices but have also paid increased costs to buy cattle to slaughter. Tyson said its cattle costs climbed by about $850 million in the quarter that ended on December 27, compared to a year earlier.

The company’s net sales rose 5.1% to $14.31 billion in the 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 little changed in early trading.

Chicken sales rose 3.7% during the quarter, though the segment’s adjusted operating income slipped to $459 million from $471 million a year earlier.

 Tyson said it anticipated an adjusted operating income of $1.65 billion to $1.90 billion for the chicken business in the fiscal year 2026, up from a previous forecast of $1.25 billion to $1.5 billion.

For beef, quarterly 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 said it expected the beef business to lose $250 million to $500 million in fiscal 2026, compared to its previous outlook for losses of $400 million to $600 million.

 Tyson has said it is closing a major beef plant in Nebraska, and reducing operations at a Texas facility.

(Reporting by Tom Polansek and Angela Christy M in Bengaluru; Editing by Maju Samuel and Sharon Singleton)