Tyson’s turnaround: ‘We have a fundamentally different and better chicken business’
The company reported yesterday that its adjusted operating income of $512 million and adjusted earnings per share of 92 cents per share both more than doubled in the fourth quarter compared to a year ago when the protein giant reported an operating income loss of $463 million and an adjusted EPS of 37 cents per share.
While the accompany attributed its success in part to its “multi-protein, multi-channel portfolio,” which includes beef, pork and chicken, the MVP of the three was chicken.
Tyson’s chicken division reported its best annual performance in seven years with $1.01 billion in adjusted operating income in fiscal 2024 and an operating income of $409 million in the fourth quarter from a loss of $267 million a year ago.
“We have a fundamentally different and better chicken business than we had even a year ago, certainly two, three years ago,” CEO Donnie King told investors Nov. 12 during the company’s fourth quarter earnings call.
In response, shares of Tyson Foods spiked 7.7% within an hour of reporting its results and continued to climb as high as 11.1% before settling at 5.7% at the end of day.
A strategy for success
The results would be worth crowing about for almost any business, but they are particularly notable given Tyson’s struggles with its chicken business in recent years related to “several missteps and changing consumer behavior.”
For example, in November and December of 2023, the company overproduced fresh chicken after underdelivering the three prior years, which negatively impacted the company when paired with avian flu and struggles with breeding and hatch rates that dropped sharply in the summer of 2021.
In response, Tyson invested heavily in “operational improvements,” including shuttering multiple US plants and laying off employees to improve margins while simultaneously investing in a high-tech new facility to produce fully-cooked products with higher margins and which better aligned with new consumer demands.
“We executed our strategy in ’24. It was a great team effort as we drove over half a billion dollars in operational improvements across live plants and then matching up our supply and demand, Poultry Group President Wes Morris said.
“But here is the part that most people do not know. While we were working on the cost side, we were also resetting the stage for the revenue side and winning with consumers. … We did a complete do-over in which we upgraded our quality to the point that our testing exceeded consumer expectations,” he said.
New products, packaging and advertising to reach broader consumer set
Looking forward, he added, “we have got a big innovation pipeline, both experimental and better-for-you. And experimental is form and flavor, what I call where food meets fun. And then the better for you is capitalizing on the protein content.”
The company also recently unveiled upgraded packaging and a rebrand that Morris said is based on shoppers’ preferences for brand, form and flavor. These are complemented with a planned new advertising campaign that Morris said resonates with younger shoppers, which he said will create “sustainability of demand over time.”
All in all, he said, “we are well positioned into ’25 and beyond to have a successful, sustainable business.”
