Tyson Foods, Inc.
Analysis
Tyson has turned chicken and prepared foods into a branded business that sells on committed orders rather than spot prices, and both keep beating their own targets. Beef is the counterweight: losses keep widening, and they have twice pulled the full-year outlook back down.How much of Tyson's profit still comes from beef?
- Chicken stopped behaving like a commodity business.
About three-quarters of chicken profit now runs on the prepared-foods model, with volume agreed before the chicks hatch. Chicken prices fell industry-wide in Q3 while Tyson's own price rose, so profit no longer tracks the spot market.How much of chicken's volume is committed before the birds hatch?
- Beef losses widened even after Tyson shrank its plants.
Tyson shut a Nebraska plant and cut Amarillo to one shift to match a shrinking cattle herd. The beef loss target was narrowed, then widened past where it began, and that pulled the whole company's outlook down in Q3.When did beef last make money, and how much did it make?
- The turnaround is changing hands half-finished.
Donnie King leaves after 12 quarters of doing what he said, handing over to a long-serving board member and a new chief operating officer. The plan is unchanged, but the piece still unsolved is beef, and this team has not run it publicly.
- Chicken mix shiftThe bull case is that Tyson's chicken business now earns its margin from branded, value-added products sold to committed customers rather than from commodity prices.
- Prepared Foods brand gainsPrepared Foods keeps taking volume and dollar share from competitors, and management argues the same customer-driven model now underpins most of the chicken segment.
- Beef cycle eventual turnThe beef loss is treated as cyclical: a shrinking herd, a reopened Mexican border and a smaller plant footprint set the segment up to recover when cattle supplies rebuild.
- Cattle supply shortageThe bear case is that the cattle herd is the smallest in decades, so beef losses persist for years and the segment keeps dragging on consolidated profit.
- Commodity price exposureChicken margins still depend on commodity prices and grain costs, and industry cutout values fell sharply even as Tyson reported record segment profit.
- Cost pass-through lagPrepared Foods and foodservice contracts pass raw material costs through with a delay, so swings in beef and pork trim hit margins before pricing catches up.
| Politician | Transaction | Amount | Traded | Filed |
|---|---|---|---|---|
Donald Trump Republican · Executive | Purchase | ≥$15K | Aug 26 | Oct 8 |
Donald Trump Republican · Executive | Sale | ≥$500K | Jul 20 | Sep 22 |
Donald Trump Republican · Executive | Sale | ≥$1K | Jun 23 | Aug 22 |
Donald Trump Republican · Executive | Sale | ≥$50K | Jun 12 | Aug 22 |
Donald Trump Republican · Executive | Purchase | ≥$100K | May 18 | Jul 1 |
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How Tyson Foods turned $54.4B of revenue into $1.1B of operating income.
| Revenue | ||
|---|---|---|
| Beef | $21.6B | ▲ 5.59% YoY |
| Chicken | $16.8B | ▲ 2.51% YoY |
| Prepared Foods | $9.9B | ▲ 0.80% YoY |
| Pork | $5.8B | ▼ 2.07% YoY |
| Corporate and Other | $2.3B | ▼ 2.63% YoY |
| Total revenue | $54.4B | |
| Gross profit | $3.6B | 6.5% |
| Operating income | $1.1B | 2.0% |