Tyson Foods, one of the leading manufacturers of various meat brands like Jimmy Dean and Hillshire Farm, is anticipating a decrease in margins for beef due to a decline in U.S. production. The United States Department of Agriculture (USDA) projects that domestic beef production will decrease by approximately 3% in fiscal 2023 compared to fiscal 2022.
Outlook for Beef
In light of this projection, Tyson Foods expects its adjusted operating margin for beef to fall between (1)% and 1% in fiscal 2023. This decline in margins is directly attributed to the expected decrease in domestic beef production.
Outlook for Pork
The USDA projects that domestic pork production will remain relatively flat in fiscal 2023 compared to fiscal 2022. Tyson Foods foresees an adjusted operating margin between (4)% and (2)% for its pork segment in fiscal 2023.
Outlook for Chicken
In contrast to the decline expected in beef and the stagnation projected for pork, the USDA anticipates a growth of approximately 3% in chicken production in fiscal 2023 compared to fiscal 2022. As a result, Tyson Foods expects an adjusted operating margin of (1)% to 1% for its chicken segment throughout fiscal 2023.
In addition to providing insights into future projections, Tyson Foods announced the closure of four processing facilities within its Chicken segment. The affected locations include Corydon, Indiana; Dexter, Missouri; Noel, Missouri; and North Little Rock, Arkansas. By optimizing network asset utilization, Tyson Foods aims to shift production to other facilities and plans to cease operations at the impacted locations during the first two quarters of fiscal 2024.
In conclusion, Tyson Foods is expecting lower margins on beef due to a decline in U.S. production, while the outlook for pork remains relatively flat and an increase in chicken production is anticipated. The company's optimization efforts in the Chicken segment further align with its strategic goals.