Tyson Foods has once again lowered its annual profit forecast, now expecting fiscal year 2026 adjusted operating income to be between $2.1 billion and $2.3 billion, down from its previous projection of $2.2 billion to $2.4 billion. This downgrade is primarily attributed to deepening losses in its beef segment, which is now expected to incur an adjusted operating loss of $500 million to $650 million, a significant increase from the prior expectation of a $350 million to $500 million loss. This marks a continuation of a losing streak for the beef business that began in early 2024.
The persistent struggles in the beef division are driven by a prolonged shortage of cattle, which has kept livestock prices elevated. Despite Tyson's efforts to streamline its beef-processing network, including closing a beef plant in Nebraska and reducing operations at a Texas facility, these soaring cattle costs have negated any savings. In the third quarter, beef volumes declined by 15.9% year-over-year, although prices charged to customers rose by 12.1%. CEO Donnie King noted that the reopening of the Mexican border to cattle imports, suspended due to New World screwworm concerns, would not fully address the current beef losses and any improvements are not expected until 2027 and beyond.
While the beef segment continues to face challenges, Tyson's chicken business is providing a crucial offset. The chicken segment has shown seven consecutive quarters of growth, with sales volumes rising 1% in the third quarter and adjusted operating margin increasing by 11.2%. The company anticipates a "constructive year" for its chicken business in 2027, projecting segment operating income, as adjusted, of $1.90 billion to $2.05 billion for fiscal 2026. Overall, Tyson reported third-quarter sales of $13.87 billion, falling short of analysts' estimates of $14.12 billion, and expects annual revenue growth of 2.5% to 3.5%, lower than analysts' expectations of 4.3% growth.
