Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

Tyson Foods earnings miss estimates as pork, beef sales weaken

Published 11/14/2022, 07:03 AM
Updated 11/14/2022, 12:46 PM
© Reuters. FILE PHOTO: Tyson Chicken Nuggets, owned by Tyson Foods, are seen for sale in Queens, New York, U.S., November 16, 2021. REUTERS/Andrew Kelly/File Photo

By Tom Polansek and Ananya Mariam Rajesh

(Reuters) -Tyson Foods Inc shares slumped 2% on Monday after the U.S. meat processor said declining demand for pork and premium beef contributed to lower-than-expected quarterly earnings.

Food companies like Tyson are grappling with increased costs for items ranging from livestock to labor. They are also assessing how much demand may fall as they raise prices for consumers.

The maker of Ball (NYSE:BALL) Park hotdogs projected full-year 2023 sales between $55 billion and $57 billion, compared with analysts' expectation for $53.6 billion, according to IBES data from Refinitiv. Its revenue outlook was "surprisingly strong," JP Morgan analysts said in a note.

Consumers are willing to pay for food to eat at home, Tyson Chief Executive Donnie King told reporters.

But analysts have raised concerns that higher prices will increasingly push shoppers to buy cheaper meat, denting processors' profits. Demand for premium cuts of beef declined in the quarter ended Oct. 1 compared with strong results a year earlier, Tyson said.

Quarterly operating income for Tyson's beef business, its largest segment, sank by 67% from a year ago to $375 million, while its average prices dropped by 8.2%. Tyson paid more for cattle, the company said, as a drought in western United States has pushed ranchers to reduce their herds.

"Beef margins are correcting rapidly amidst a declining cattle herd," Goldman Sachs (NYSE:GS) analysts said.

In pork, Tyson reported an operating loss of $55 million, compared with income of $78 million last year, as sales volumes and prices slipped. The company's chicken business swung to a quarterly profit, meanwhile, as sales volumes increased 1.1% and prices climbed by an average 18.2%.

3rd party Ad. Not an offer or recommendation by See disclosure here or remove ads .

Next year, "chicken prices likely will be down by a great degree and consumers will continue to trade down," JP Morgan said.

Tyson reported quarterly sales rose about 7% to $13.74 billion, topping analysts' estimates for $13.50 billion. The company posted an operating margin of 5.6%, compared with 14.9% last year. Excluding items, earnings were $1.63 per share, below estimates for $1.73.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.