Key facts
- Tyson Foods lowered its fiscal 2026 adjusted operating income forecast to $2.1 billion-$2.3 billion.
- The company anticipates a beef business operating loss of $500 million to $650 million.
- Beef volumes decreased by 15.9% in the third quarter.
- Chicken segment operating margin increased by 11.2%.
- Third-quarter sales of $13.87 billion fell short of analyst expectations.
Tyson Foods has revised its annual profit forecast downward, anticipating wider losses in its beef segment due to persistently high livestock costs stemming from historically low cattle inventories. The company now projects fiscal 2026 adjusted operating income to be between $2.1 billion and $2.3 billion, a decrease from its prior outlook of $2.2 billion to $2.4 billion. This adjustment reflects challenges in the beef business, where volumes fell 15.9% in the third quarter, leading to an increased expected operating loss of $500 million to $650 million, up from a previous forecast of $350 million to $500 million.
The scarcity of cattle is attributed to years of drought impacting pastures and increasing feed expenses, reducing U.S. cattle inventories to a 75-year low. This situation not only drives up beef prices but also squeezes profit margins for meatpackers like Tyson. Furthermore, inflation-conscious consumers are curbing spending on beef, further impacting demand.
Tyson's revenue growth forecast for fiscal 2026 has also been adjusted to 2.5% to 3.5%, falling short of the 4.3% expected by analysts. While the beef segment faces significant headwinds, Tyson's chicken business is performing better, with sales volumes up 1% and an adjusted operating margin of 11.2% in the third quarter, helping to partially offset weakness in beef.
The company's third-quarter sales reached $13.87 billion, missing analyst expectations of $14.12 billion. Efforts to rebuild cattle herds have been described as 'spotty,' suggesting tight supplies will persist. A temporary suspension of livestock imports from Mexico by the U.S. Department of Agriculture due to screwworm concerns further constrained supplies, though the ban is expected to be lifted soon.