Tyson Foods' Says Reintroducing Antibiotics Yields Healthier Chickens

Tyson Foods Inc. TSN has reported positive outcomes from its decision to reintroduce some antibiotics into its poultry operations. 

The company observed healthier birds with better weight gain and reduced mortality rates, according to CEO Donnie D. King. 

The largest meat supplier in the U.S. had previously eliminated all antibiotics but reversed this decision last year, maintaining a commitment not to use antibiotics critical to human medicine, reported Bloomberg.

The move was tracked by chicken buyers like the restaurant operator Chick-Fil-A Inc. 

This adjustment was part of Tyson's broader strategy to improve operational efficiency amid rising costs and a surplus of chicken supply. 

King, speaking at the BMO Global Farm to Market conference in New York, highlighted that these efforts have resulted in a significantly stronger chicken business over the past year.

The company reported that in the second quarter of FY24, adjusted EBITDA increased by 25.5% to $1.5 billion. Adjusted EPS of $0.62 beat the consensus estimate of $0.39.

The demand for Tyson's chicken products has surged while the industry grapples with limited supply due to poor egg fertility and high mortality rates. 

King noted that the company's measures, including plant closures and reintroducing certain antibiotics, have played a crucial role in this turnaround.

Additionally, Tyson has benefited from a decline in U.S. meat inventories and a reduction in feed costs. 

However, King emphasized that the most significant improvements stemmed from internal efficiency measures, particularly the closure of six processing plants last year.

Despite these gains, the broader poultry industry continues to face challenges. Tyson's strategic moves, including its antibiotic policy shift, highlight the company's efforts to navigate these difficulties and maintain its market position.

Tyson's stock has gained more than 23% in the last 12 months. Investors can gain exposure to the stock via VanEck Agribusiness ETF MOO and Invesco S&P 500 Equal Weight Consumer Staples ETF RSPS.

Price Action: TSN shares were trading lower by 0.05% at $60.68 at the last check on Thursday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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