By Ilena Peng
Tyson Foods Inc. raised its full-year profit outlook as strong protein demand enables growth even as the struggling beef segment shows no signs of turning around.
The largest U.S. meatpacker now sees adjusted operating income between $2.2 billion and $2.4 billion in the fiscal year, up $100 million from its prior range. A greater consumer appetite for protein has supported more chicken and pork purchases, while also allowing Tyson to pass through higher beef prices to offset the impacts of costly U.S. cattle supplies.
But while Tyson’s adjusted earnings for the quarter beat analyst estimates, its beef operations posted a wider loss. The company now expects that segment to lose $350 million to $500 million in 2026, adjusting the bottom end of its range from $250 million previously.
Tyson shares wavered between gains and losses in early Monday trading.
The dimmer outlook for beef is the latest sign that the situation for processors won’t quickly improve, as the U.S. cattle herd is at the smallest in 75 years. Tyson has tried to rightsize its largest segment, including by closing a Nebraska plant and cutting a Texas facility to a single shift.
The quarterly results “reflect only a portion” of those adjustments, with benefits set to build later in the year, Chief Executive Officer Donnie King said on an earnings call. The company anticipates lower losses in the second half of the year, but “we continue to expect results below historical margin levels until cattle supplies normalize,” King added.
That has left meatpackers like Tyson more reliant on chicken, which has been more profitable amid production efficiencies and high consumer demand for the relatively cheaper protein. Wholesale chicken breast prices in the second quarter recovered, after having dropped last fall to the lowest in more than a year. Second-quarter adjusted operating income of $523 million in Tyson’s chicken business was up 27% from the same time last year.
“We view the magnitude of the Chicken beat as encouraging, along with the guidance boost for total company operating profit,” JPMorgan analysts Thomas Palmer and Elsa Evans wrote in a note.
The company also has the capacity to pick up “some incremental volume” in the market following a fire at competitor Koch Foods Inc.’s plant earlier this year, King said.
The results come as President Donald Trump has ordered the Justice Department to look into the meatpacking industry amid record beef prices. Bloomberg reported late last month that the agency had opened a criminal investigation into how meatpackers including Tyson purchase cattle from ranchers.
Consolidation in the industry — four companies control about 85% of U.S. cattle purchases, according to the Agriculture Department — has in the past raised concerns about prices.
But the severity of the current cattle shortage has sent prices so high that meatpackers are losing money on every animal they process, according to data from HedgersEdge. The Chicago futures contract for so-called live cattle that are ready for slaughter hit a fresh record high last Wednesday.
Hopes of a quick rebuild have been dampened as more than 70% of the U.S.’s cattle are now in areas affected by dryness or drought, according to U.S. Drought Monitor data as of April 28. That limits the amount of pasture that animals can graze on and discourages ranchers from holding onto animals for breeding.
Processors could benefit from increased beef imports, which are blended into U.S. products for ground meat. But another key source of supplies, live cattle from Mexico, are likely choked off for longer as detections of the New World screwworm — a deadly cattle parasite — have recently accelerated.
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