Tyson Foods drops on lackluster fiscal-2024 guidance

Tyson Foods (TSN.US) is trading lower following the release of fiscal-Q4 2023 results today before the opening of the Wall Street cash session. US food companies reported results that mixed with sales coming in below expectations and profits beating expectations. However, forecasts for fiscal-2024 fell short of analysts' expectations.

Mixed results for fiscal-Q4

Tyson Foods - world's second largest processor and marketer of chicken, beef and pork - reported fiscal-Q4 earnings today ahead of the Wall Street cash session launch. Company reported an almost-3% year-over-year drop in sales in dollar terms as well as 0.6% drop in overall sales volume. However, earnings turned out to be better than expected with adjusted operating income coming in at $236 million. Nevertheless, that was still an over-70% year-over-year decline. Chicken was the only of the company's three main 'segments' that saw increases in sales volume. Beef has barely managed to generate positive profits, with a 10.2% jump in pricing surely helping. Meanwhile, the average price of pork and beef dropped.

Fiscal-Q4 2023 results

• Sales: $13.35 billion vs $13.71 billion expected (-2.8% YoY)
• Sales volume: -0.6%
  • Beef: -6.7% vs -5.7% expected
  • Pork: -0.2% vs +1.2% expected
  • Chicken: +1.7%
  • Prepared Foods: +1% vs +0.1% expected
  • Other: +4.9%
• Adjusted operating income: $236 million vs $208 million expected (-71% YoY)
• Adjusted operating margin: 1.8% vs 1.4% expected (5.6% a year ago)
  • Beef: 0.3% vs -1.5% expected
  • Pork: -0.5% vs -2.3% expected
  • Chicken: 1.8% vs 1.3% expected
  • Prepared Foods: 6.0% vs 8.5% expected
• Average price: -1.4% vs +0.6% expected
  • Beef: +10.2% vs +6.5% expected
  • Pork: -6.7% vs -8.5% expected
  • Chicken: -9.2% vs -4.0% expected
  • Prepared Foods: -1.6% vs 1.4% expected
• Adjusted EPS: $0.37 vs $0.25 expected ($1.63 a year ago)

Lackluster guidance for fiscal-2024

Company said that its beef, pork and chicken units all faced headwinds in 2023 as supplies of some were too tight while supplies of others were too large. On top of that, Tyson Foods, which is also the largest US exporter of beef, said that strong USD limited exports. Higher food prices also limited sales at home. Nevertheless, the company noted that business improved during the second half of 2023 and expects demand for proteins to remain strong. Tyson Foods expects year-over-year improvements in cash flows and profits in fiscal-2024. However, guidance for fiscal-2024 missed analysts' expectations both in terms of sales and profit.

Fiscal-2024 forecasts

• Sales: 'relatively flat' compared to $52.9 billion in fiscal-2023 vs $54.4 billion expected
• Adjusted operating income: $1.0-1.5 billion vs $1.66 billion expected
  • Beef: -$400 - 0 million
  • Pork: 'approximately breakeven' ($0)
  • Chicken: $400-700 million
  • Prepared Foods: $800-1000 million
• Net interest expenses: 'about $400 million' vs $385 million expected
• Capital expenditures: $1.0-1.5 billion vs $1.8 billion expected

A volatile post-earnings session

Trading on Tyson Foods' shares has been very volatile today. Company's launched the Wall Street cash session lower but has managed to recover all of the losses during the first hour of trade and was even trading over 4% higher at some point. Nevertheless, those gains were erased later on and the stock is once again trading lower on the day.

Taking a look at Tyson Foods (TSN.US) chart at D1 interval, we can see that the stock has been trading in a downtrend for over a year now. A recovery move today was halted after buyers failed to break above the 50-session moving average (green line). Stock is now down almost 3% on the day and trades within a striking distance of local lows from late-October.

Source: xStation5