By Emily Dattilo and Evie Liu

Tyson Food turned in stronger quarterly results than expected as strong margins in its chicken business boosted earnings.

Stock in the meat processor gained 6.2% to $59.99 in premarket trading Monday, but fell back to $56.67 after the market opened, leaving the price up slightly for the day.

For its first fiscal quarter, ended Dec. 28, the company reported adjusted earnings of $1.14 a share, beating the consensus call for 90 cents among Wall Street analysts tracked by FactSet. Sales of $13.62 billion were also above the consensus estimate for $13.46 billion.

Quarterly sales were up 2.3% from a year ago. Sales volume increased 1.6% growth and average prices rose 0.7%.

Adjusted earnings jumped 65% from a year ago as operating margins improved to 4.3% from 1.7%. Margins in the chicken business nearly doubled to 8.6%, but the beef operation continued to lose money. Margins for prepared foods narrowed.

"Fiscal year 2025 is off to a strong start, as we delivered our third consecutive quarter of year-over-year growth in sales, operating income, and EPS," said CEO Donnie King in a statement. "Our best quarterly performance in more than two years reflects improved execution across the business, including exceptional results in chicken."

Demand for meat and other sources of protein will likely remain strong this year. The Department of Agriculture expects domestic protein production to increase approximately 1% compared with 2024 levels.

Chicken and pork production is expected to grow by 2%, but a shortage of beef will likely continue. America's cattle supply is at its lowest level since 1951: Ranchers started selling off their herds two years ago due to persistent drought, rising costs, and low profit margins.

This means livestock are getting more expensive for meatpacking plants. That could hurt margins for companies such as Tyson, but also lead to higher prices for consumers.

For fiscal 2025, Tyson anticipates overall sales to be flat to up 1%. It said adjusted operating income is likely to be between $1.9 billion and $2.3 billion.

Write to Emily Dattilo at emily.dattilo@dowjones.com

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February 03, 2025 10:19 ET (15:19 GMT)

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