What are Tyson Foods’ (TSN) expectations for FY2024?

Shares of Tyson Foods, Inc. (NYSE: TSN) were up over 3% on Tuesday. The stock has dropped 24% year-to-date. The company delivered mixed results for the fourth quarter of 2023 and provided lackluster guidance for fiscal year 2024 a day ago. Domestic protein production, in general, is expected to be lower in FY2024 compared to FY2023.

Quarterly performance

Tyson Foods’ sales decreased nearly 3% year-over-year to $13.34 billion in Q4 2023 and missed expectations. The decline was mainly caused by the pork and chicken segments where the company saw a reduction in price per pound. Adjusted EPS fell 77% to $0.37, but managed to surpass estimates.

FY2024 expectations

In its earnings report, Tyson indicated that the US Department of Agriculture anticipates a slight decrease in domestic protein production in fiscal year 2024. At the same time, the company is seeing consumer demand for protein remain relatively stable. Despite some uncertainties within the protein categories, overall sales are expected to remain relatively flat in FY2024 versus FY2023.

In the chicken segment, sales decreased double-digits in the fourth quarter of 2023 due to lower pricing. Volumes saw modest growth but production declined as the company focuses on balancing supply with demand. Tyson anticipates operational improvements in this segment to continue into FY2024 and has forecast adjusted operating income of $400-700 million for the year.

In beef, revenue saw a slight increase in Q4 as higher pricing offset lower head throughput. Operating profit declined, reflecting spread compression due to higher cattle costs. This segment is likely to remain pressured in FY2024 by tight cattle supply and spread compression. Tyson expects adjusted operating income to range between a loss of $400 million and breakeven for the year.

Revenues in the pork segment declined in Q4 due to lower pricing caused by softer global demand. Adjusted operating loss for the quarter narrowed from last year. For FY2024, the company anticipates adjusted operating income to improve to roughly breakeven.

Revenues in prepared foods saw a modest decline in Q4 caused by lower bacon pricing, which was offset by volume growth. Lower pricing, higher marketing costs, and start-up costs for new facilities were offset during the quarter by productivity initiatives and easing inflation.

Volume growth, productivity and revenue management are expected to act as tailwinds for prepared foods in FY2024 with pressure from marketing and start-up costs as well as possible changes in consumer behavior. Adjusted operating income for this segment is expected to range between $800 million to $1 billion for the year.