Tyson Foods Inc has trimmed its full-year revenue forecast, indicating that price hikes and stubbornly high inflation are discouraging consumers from spending on its products.
Shares of the Jimmy Dean sausages maker fell 5% in premarket trading, as the company also missed second-quarter revenue estimates.
US meatpackers have bumped up prices of their products to safeguard margins from spiralling costs of animal feed, labour, freight and commodity prices, aggravated due to lingering drought situation and supply chain issues.
That, coupled with mounting recessionary fears in the United States, has forced budget-conscious consumers to opt for more affordable and cheaper alternatives over pricier meat.
Quarterly Highlights
The Springdale, Arkansas-based meatpacker's net sales were $13.13 billion (€11.9 billion) in the quarter ended 1 April, compared with analysts' average estimate of $13.62 billion (€12.3 billion), according to Refinitiv data.
Average sales prices of beef and pork were down 5.4% and 10.3%, respectively, in the reported quarter, with CEO Donnie King saying the current protein market remained challenging.
Sales from Tyson's beef business, the company's biggest, fell 8.3% to $4.62 billion (€4.2 billion), while the chicken division saw an 8.4% increase to $4.43 billion (€4 billion).
Sales volumes in Tyson's beef segment fell 3%, while chicken volumes were up 6.4%.
The company, however, reported a 1.6% jump in average sales price in its prepared foods segment in the reported quarter, while volumes declined 0.4%.
Outlook
Tyson now expects fiscal 2023 sales between $53 billion (€48 billion) and $54 billion (€49 billion), compared with its previous forecast of $55 billion (€50 billion) to $57 billion (€51.6 billion).
The company also lowered its 2023 adjusted operating margin expectations for all of its primary segments — beef, pork and chicken — citing an uncertain macroeconomic environment in the year.
Donnie King, president and CEO of Tyson Foods said, "While the current protein market is challenging, we have a strong growth strategy in place and are bullish on our long-term outlook. We saw strong performance in our branded foods business and continue to be laser-focused on meeting customer needs and planning the future with them."
He added, "Through our growth strategy, focus on margin improvement, and proven leadership team, I am confident in our ability to capture the opportunities in front of us and create long-term value for customers, team members, and shareholders."
Read More: Tyson Foods 'Hit In The Mouth' On Meat Supplies, CEO Says
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