Tyson Foods has factored tariff uncertainty and the pressured consumer into its unchanged guidance for the year but also aims to reap $200m in savings from a revamp of its cold storage operations.
“Across all segments, we are actively monitoring the evolving macro landscape. And, while we’re not immune, our experience navigating past cycles gives us confidence to respond effectively and proactively scenario plan,” president and CEO Donnie King told analysts yesterday (5 May).
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As he discussed second-quarter results, King said the meat giant is “focused on what we can control and executing with excellence” as Tyson Foods puts more weight behind its prepared foods business unit to drive margins, a division he called a “dependable driver of profitability”.
The Hillshire Farm brand owner delivered an adjusted operating profit margin in prepared foods above the group and other unit results. Brady Stewart, the president of that division along with beef and pork, said the company has “one of the most robust innovation pipelines in the history of Tyson Foods”.
Prepared foods notched up a margin of 10.2% in the second quarter compared to 9.7% in the opening three months of the year. That was above the group print of 3.8% (Q1 at 3.2%). Chicken generated a margin of 7.5% (3.9%) and pork 3.7% (2.2%).
But beef remained in negative territory at minus 2.8% (-0.7%).
“We’re navigating a challenging environment with discipline,” King said with respect to beef, although he added: “While limited cattle availability is pressuring spreads, consumer demand has remained resilient.”
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By GlobalDataHe noted how beef “is experiencing the most challenging market conditions we’ve ever seen” as adjusted operating profit for that division delivered a $149m second-quarter loss, wider than a $34m loss a year earlier.
Tyson Foods as a group recorded an operating profit of $515m compared to $406m in the corresponding period.
For the full 2025 fiscal year, the company still expects adjusted operating profit of $1.9bn to $2.3bn. Over the first six months of the year, to 31 March, Tyson Foods delivered $1.17bn, up from $817m previously.
The outlook for sales was also kept unchanged at flat to up 1%, which includes a $343m reduction “due to the recognition of legal contingency accruals” with respect to pork in the second quarter.
Tariffs, food dyes
Total group sales were flat in the second quarter at $13.07bn.
“The dynamic environment we and others have referenced includes uncertainty from tariff impacts and pressure on the consumer. But our guidance considers those risks and we’re growing at the bottom line across the entire range,” King explained to analysts during the Q&A session.
Given the investor attention on the potential impact of tariffs, the CEO gave further insight when pressed, with Tyson Foods anticipating “temporary short-term disruptions as global trade flows adjust”.
He added: “As we talked about last quarter, we’ve been contingency planning to minimise disruptions to both trade and supply chain. Frankly, we’ve been doing this for ninety years – there have been tariffs, there have been non-trade tariff barriers. There have been all those things, and we’re confident in our ability to adapt and succeed.
“We’re certainly interested in working with the administration and Congress to try to resolve this sooner rather than later, but we feel good about where we are and what we have done.”
Another talking point of late is the planned phase out of the use of petroleum-based food dyes, an initiative led by US Health Secretary Robert F. Kennedy Jr.
King said none of Tyson Foods’ products provided through its school nutrition programmes include synthetic dyes as ingredients. He added that the “vast majority of our retail branded” products “do not contain any of these types of dyes and we have been proactively reformulating those few products that do”.
Cold-storage asset sale
Meanwhile, the temperature-controlled warehouse real estate investment trust (REIT), Lineage, is acquiring four of Tyson Foods cold storage warehouses for $247m. They are located in Pottsville, Pennsylvania; Olathe, Kansas; Rochelle, Illinois; and Tolleson, Arizona, the REIT said in a statement.
After the transaction, more than 1,000 Tyson Foods’ employees will transfer to Lineage.
King explained on yesterday’s results call: “In this next phase of our optimisation journey, we’re taking deliberate measured steps to evolve our logistics and distribution infrastructure.
“We will sell multiple smaller conventional cold storage warehouses unlocking gross proceeds in a range of $250-300m and then transition as a new anchor partner into several large scale fully automated next generation cold storage facilities.
“These facilities will reduce network complexity, streamline inventory flow and simplify processes in ways that will better position us to serve our customers smarter and faster, now and into the future.”
Tyson Foods is looking to save $200m in annual savings from the project, which mainly affects prepared foods and poultry, over a timeframe of three to five years, divisional president Stewart said.
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