Tyson Foods (TSN 8.26%)one of the leading American food companies, released results for the fourth quarter of fiscal 2024 on November 12, much better than those of the previous year. The company returned to profitability, with the most notable gains in the chicken and prepared foods segments, although it overcame challenges such as high raw material costs.

Adjusted earnings per share (EPS) increased 149% to $0.92 for the quarter, while total revenue increased 1.6% to $13.565 billion.

Understanding Tyson Foods

Tyson Foods, a leading name in protein foods, is renowned for its vertical integration chicken segment. The company controls the entire supply chain, from selection to processing, giving it greater ability to manage its operational efficiency. This is not limited to poultry, however. Tyson’s operations also encompass the beef, pork and prepared foods segments.

Recently, the company has placed more emphasis on improving efficiency and innovation. Reducing raw material expenses and optimizing processing has been at the heart of its strategy, particularly in light of recent fluctuations in its input costs. The cost of raw materials, mainly those of livestock and feed grains, directly influences its profit margins.

In a competitive market landscape, maintain strong customer relationships with major retailers such as Walmart is essential to revenue growth. Innovation has become crucial as consumer preferences shift toward diverse, value-added protein products, leading Tyson to invest in new offerings that meet these trends.

Quarter Highlights

In the quarter ended September 28, Tyson’s chicken and prepared foods segments performed particularly well. The chicken segment saw a remarkable turnaround, with adjusted operating profit reaching $356 million from $75 million the previous year, giving it an operating margin of 8.4%.

This recovery was attributed to productivity improvements throughout the supply chain and cost management initiatives that offset rising feed costs. The prepared foods segment also posted strong numbers with adjusted operating profit of $205 million for the quarter and a margin of 8.3%, demonstrating Tyson’s prowess in value-added products.

The beef and pork segments did not fare as well. In the beef segment, Tyson reported an adjusted operating profit loss of $71 million, citing high livestock costs and market volatility as influencing factors. The pork segment saw some improvement from the prior fiscal year’s adjusted operating loss of $8 million; this time it posted a modest adjusted operating profit of $19 million. However, its margin of only 1.3% reflects difficulties.

During the quarter, Tyson worked to streamline its operations to better withstand input cost volatility and ensure sustained profitability. Even as its international operations saw revenues and profits fall due to strategic realignments, Tyson remained committed to its vertically integrated model.

Also this month, Tyson announced a 2% increase in its Class A common stock dividend, to $0.50 per share quarterly.

Looking to the future

For its 2025 fiscal year, Tyson Foods expects adjusted operating income of between $1.8 billion and $2.2 billion. Although sales are expected to remain flat or decline slightly, the company will continue to focus on operational improvements and capital management to maintain profitability.

Investors should monitor Tyson’s strategies to mitigate risks related to raw material costs and supply chain disruptions. Additionally, changing consumer preferences will likely drive Tyson’s continued focus on innovative product development. Management’s cautious optimism, reflected in its forecasts, suggests a balance between risk management and investing in future growth opportunities.