(Reuters) – Tyson Foods surpassed Wall Street expectations for second-quarter profit on Monday, as it begins to reap the benefits of shutting some chicken processing plants to reduce costs.
Shares of the Springdale, Arkansas-based company rose 3.5% in premarket trade, after gaining more than 15% for the year so far.
The biggest U.S. meat company by sales has shuttered six U.S. chicken plants since the start of last year, laid off corporate employees and announced plans to close a pork plant, in an attempt to rein in costs.
That helped it post adjusted earnings of 62 cents per share for the second quarter, compared with analysts’ average estimate of 39 cents, based on LSEG data.
However, it has been grappling with slowing demand over the last few quarters as price-conscious customers cut back on expensive purchases and look for affordable options amid still-high food prices and borrowing costs.
Tyson’s second-quarter net sales fell 0.5% to $13.07 billion, compared with estimates of $13.16 billion.
Sales in the chicken segment, which struggled with excess supply during 2023, were down 8.3% in the quarter even though prices fell 2.1%. Volumes dropped by 6.1%.
On the other hand, volumes at the beef segment – its largest – grew for the first time in five quarters, logging a 2.8% increase. The company’s pork segment also saw volumes increase by 2.9%.
In the quarter, the operating margin in Tyson’s beef business dropped by 0.7%. The business has grappled with limited U.S. cattle supplies since last year.
Tyson, the maker of Ball Park hotdogs, said it continues to expect total sales to be flat in fiscal 2024, compared with the previous year’s $52.88 billion.
(Reporting by Granth Vanaik in Bengaluru and Tom Polansek in Chicago; Editing by Devika Syamnath)
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