Tyson Foods' stock slides 6% after company swings to a quarterly loss

By Ciara Linnane

Company's sales fell short of analyst estimates

Tyson Foods Inc.'s stock fell 6% premarket Monday, after the chicken, beef and pork producer swung to a loss for its fiscal third quarter, weighed down by impairment charges.

The company (TSN) had a net loss of $417 million, or $1.18 a share, for the quarter to July 1, after earnings of $750 million, or $2.07 a share, in the year-ago period. Excluding one-time items, the company's adjusted per-share earnings came to 15 cents, below the 26-cent FactSet consensus.

Sales fell 3% to $13.140 billion from $13.495 billion a year ago, also below the $13.627 billion FactSet consensus.

The company announced the closure of four chicken facilities in the quarter in North Little Rock, Arkansas; Corydon, Indiana; Dexter, Missouri; and Noel, Missouri, in an effort to reduce costs and improve capacity utilization. It expects to cease operations in the first two quarters of fiscal 2024. The company is still assessing the financial impact but expects to take total charges of $300 million to $400 million through the planned closure dates.

The company booked a goodwill impairment charge of $210 million in its chicken segment and $238 million in international/other segment in the third quarter.

"While current market dynamics remain challenging, Tyson Foods is fully committed to our vision of delivering sustainable, top line growth and margin improvement," Chief Executive Donnie King said in a statement.

Beef sales fell 5.3% to $4.956 billion in the quarter as prices rose 5.2% while pork sales fell 1.8% to $1.324 billion as prices fell by 16.4%. Chicken volumes rose 2.8% to $4.212 billion as prices fell 5.5%, and prepared food sales fell 0.7% to $2.383 billion as prices fell 1.9%. Tyson is parent to brands including Jimmy Dean, Hillshire Farm, Ball Park, Wright, Aidells, ibp and State Fair.

See also: Tyson Foods stock slides after meat producer swings to surprise loss

The USDA is expecting domestic production of beef to fall about 3% in fiscal 2023, and for pork to be relatively flat. Chicken production is expected to increase by about 3%, said Tyson.

The company is now expecting full-year sales to range from $53 billion to $54 billion, while FactSet is expecting $53.7 billion.

Liquidity stood at about $3.7 billion as of July 1, and the company expects to remain above its minimum liquidity target of $1.0 billion.

The stock has fallen 9.3% in the year to date, while the S&P 500 has gained 17%.

See now: Tyson workers in Arkansas sue over lack of COVID protections in 2020

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-Ciara Linnane

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08-07-23 0832ET

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