USA

Tyson Foods shares sink 9 percent as high beef prices hurt demand

Beef

Tyson Foods reported lower-than-expected quarterly sales and stuck to its annual revenue forecast amid weaker demand for beef, sending shares down 9% and overshadowing better-than-anticipated profits, informs Reuters.

Posted on May 06 ,00:20

Tyson Foods shares sink 9 percent as high beef prices hurt demand

U.S. President Donald Trump's trade policies hung over the meat company due to concerns that tariff disputes could raise prices for a range of consumer goods and further reduce demand for pricey meat products.

Beef prices have already climbed after U.S. ranchers slashed their cattle herds due to a years-long drought that dried up pasture lands used for grazing.

"Beef is experiencing the most challenging market conditions we've ever seen", CEO Donnie King told analysts on a call.

Tyson warned that tariffs could also trigger some sales disruptions, adding that exports account for less than 10% of its business. But King said the impacts would be temporary as trade flows change, and that the company does not expect global meat consumption to decline.

Demand for Tyson's beef declined as average prices spiked 8.2% in the second quarter that ended on March 29.

Some shoppers are increasingly opting for less-expensive meats, such as chicken, as consumer sentiment has ebbed.

The beef business, Tyson's largest unit, reported an adjusted operating loss of $181 million for the six months that ended in March.

The company maintained its outlook for total adjusted operating income of $1.9 billion to $2.3 billion in fiscal year 2025.

Some investors had hoped that Tyson would raise it given strong chicken sales, but King said the company feels comfortable with the forecast.

"We lost $181 million and then you stack on tariffs and consumer pressure and inflation that we're seeing in the marketplace", he said.

Total quarterly net sales of $13.07 billion missed analysts' estimates for $13.14 billion, while earnings of 92 cents per share topped expectations of 82 cents, according to LSEG data.

In Tyson's chicken unit, quarterly sales volumes rose 3% as average prices declined 1.1%, lifting income to $312 million from $160 million a year earlier.

"You've obviously come through very strongly in the first half of the year, but keeping the guidance the same implies I think a fairly big decline year over year in operating income", Bernstein analyst Alexia Howard said on the call.

Legal contingency accruals added pressure on sales, as Tyson said it increased accruals by $250 million for claims its pork business was involved in price fixing.

 NEWSLETTER - Stay informed with the latest news!

Comments





Similar articles

USA

USMEF: April pork exports below year-ago

Pork exports totaled 237,250 mt in April, down 15% from a year ago and the lowest in 10 months. E...


Read more Read more
BRAZIL

ABPA celebrates resumption of Mexican imports of chicken meat from Brazil

The reopening was confirmed by MAPA, after extensive negotiations with authorities from the Secre...


Read more Read more
EU

Austria and Hungary share France's concerns over draft Mercosur agreement

"Significant quantities of imported products produced under lower standards could lead to the exc...


Read more Read more
Websolutions by Angular Software and SpiderClass