Tyson Foods Soars on Chicken Demand, Weathers Beef Market Turmoil

CHICAGO, Feb 2 (Reuters) – Tyson Foods Inc. (TSN.N) delivered a stronger-than-anticipated quarterly performance, the meat processing giant announced Monday, as its chicken business proved a financial bulwark against substantial headwinds in the volatile beef market.

The company's results underscore a broader shift in American protein consumption. A multi-year drought across key cattle-raising regions has severely reduced pastureland and driven up feed costs, prompting ranchers to thin herds to levels not seen in generations. The U.S. Department of Agriculture confirmed last Friday that the national cattle inventory hit a 75-year low as of January 1.

While high beef prices typically benefit processors, Tyson and its peers have faced a squeeze. The scarcity of cattle has driven up their procurement costs, compressing margins even as consumer prices rise. This dynamic has accelerated a pivot toward more affordable proteins, with Tyson's chicken unit sales volume rising 3.7% for the quarter. In contrast, beef sales volume dropped 7.3%, despite a 17.2% surge in price.

For the first quarter, Tyson reported net sales of $14.31 billion, a 5.1% increase that exceeded analyst consensus of $14.09 billion. Adjusted earnings came in at 97 cents per share, beating estimates of 94 cents.

Looking ahead, the Springdale, Arkansas-based firm provided an optimistic update to its fiscal 2026 guidance. It now expects sales growth of 2% to 4%, with the midpoint above current analyst projections. Notably, Tyson raised its adjusted income outlook for chicken, pork, and prepared foods, while scaling back its projected loss for the beef segment. The company now anticipates adjusted operating income for chicken to reach between $1.65 billion and $1.90 billion, a significant uplift from prior forecasts.

These strategic adjustments come amid operational downsizing in beef processing. In January, Tyson initiated mass layoffs at a major beef plant in Lexington, Nebraska, slated for closure. The facility once employed approximately 3,200 workers. The company has also announced plans to reduce operations at its Amarillo, Texas beef plant, reflecting the ongoing recalibration of its supply chain.

Market Reaction & Analyst Views: The earnings beat provided a measure of confidence to investors concerned about Tyson's exposure to the troubled beef market. "Tyson's diversified portfolio is its saving grace," said Michael Ridgeway, a consumer staples analyst at Hartford Capital. "The guidance hike for chicken shows they are effectively capitalizing on a sustained consumer trend toward value-oriented protein, which should provide stability amid the beef sector's unpredictability."

Others were more critical of the human and supply chain impact. Sarah Chen, a food policy advocate with the Sustainable Agriculture Coalition, offered a sharper take: "These layoffs in Nebraska are the direct human cost of a failed model. Tyson's profits are being propped up by chicken demand while communities that built their economies around beef processing are being abandoned. It highlights the fragility and social disruption embedded in our concentrated food system."

A more measured perspective came from David Miller, a retired rancher from Iowa: "We've seen cycles before, but this drought is different. It's forcing everyone—from the family ranch to the biggest packer—to make hard choices. Tyson's shift is a business reality, but it leaves a lot of uncertainty for cattle country's future."

Reporting by Tom Polansek in Chicago and Angela Christy M in Bengaluru; Editing by Maju Samuel for Reuters.