Tyson Foods lowered its fiscal 2026 adjusted operating income forecast on Monday, as losses in its beef segment worsened amid tight U.S. cattle supplies that have kept livestock costs elevated.
The meatpacker now expects a beef operating loss of up to $650 million for fiscal 2026, up from a prior forecast of $500 million
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Tyson Foods lowered its fiscal 2026 adjusted operating income forecast on Monday, as losses in its beef segment worsened amid tight U.S. cattle supplies that have kept livestock costs elevated.
The Springdale, Arkansas-based company now expects full-year adjusted operating income of $2.1 billion to $2.3 billion, down from a prior forecast of $2.2 billion to $2.4 billion, the company said. For its beef segment, Tyson now projects an adjusted operating loss of $500 million to $650 million, compared with an earlier forecast of a loss of $350 million to $500 million.
Tyson stock fell about 3% in premarket trading on Monday.
In the third quarter ended June 27, the beef segment posted an adjusted operating loss of $138 million, compared with a loss of $116 million a year earlier. Beef sales volumes dropped 15.9% in the quarter while prices rose 12.1%, the company said.
According to Reuters, a years-long drought drove up feed costs and pushed American ranchers to pare down the national cattle herd to a size not seen in three-quarters of a century. Cattle procurement costs have climbed faster than what meatpackers can recover through higher beef prices, eroding their margins. The U.S. government's decision, more than a year ago, to halt cattle imports from Mexico in order to prevent the spread of the flesh-eating New World screwworm has added additional pressure on domestic supply.
The run-up in beef prices has nudged a portion of shoppers to substitute chicken, which has emerged as a more affordable alternative at the grocery store. Chicken segment adjusted operating income reached $488 million in the quarter, up from $448 million a year earlier, with adjusted operating margin expanding to 11.2% from 10.6%, the company said. Chicken has now posted seven consecutive quarters of growth.
Total quarterly sales came in at $13.87 billion, roughly flat compared with $13.88 billion a year earlier.
For fiscal 2026, Tyson said it expects revenue growth of 2.5% to 3.5% and free cash flow of $1.3 billion to $1.7 billion.
According to Reuters, director Jeff Schomburger will succeed Donnie King in the chief executive role this October. "We delivered strong third quarter results, fueled by continued strength in our Chicken and Prepared Foods segments," King said in a statement.
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