Tyson Foods has forecast revenue for its next fiscal year below Wall Street estimates after missing fourth-quarter revenue expectations, hit by falling chicken and pork prices as well as slowing demand for its beef products.
With higher food prices and interest rates pressuring household budgets, American consumers have been cutting back on meat purchases, hurting sales at companies such as Tyson and Pilgrim's Pride.
Prolonged headwinds such as declining US cattle herds due to a lingering drought as well as high labour and raw material costs, have further strained Tyson's margins.
Divisional Performance
Tyson said sales volumes in its beef business, its largest unit, fell 6.7% in the quarter ended 30 September, while prices rose by 10.2%.
The company's costs to buy cattle to process into beef increased by about $2.1 billion (€1.9 billion) in fiscal year 2023 from the previous year.
Tyson, the biggest US meat company by sales, said its beef unit will have an adjusted operating loss of between $400 million (€374.8 million) and breakeven due to tight US cattle supplies in fiscal year 2024.
'Guidance was well below the street across production segments,' Bernstein analysts said.
Chicken sales volumes rose 1.7% in the latest quarter as customers switched to cheaper alternatives from high-end proteins, though prices dropped 9.2%.
Quarterly Highlights
The US meat packer expects sales to be flat in fiscal 2024 as compared with the total sales of $52.88 billion (€49.5 billion) it posted in fiscal 2023. Analysts, on average, expect sales of $54.40 billion (€51 billion), according to LSEG data.
The company's fourth-quarter sales decreased 2.8% to $13.35 billion (€12.5 billion). Analysts, on average, had expected sales of $13.71 billion (€12.9 billion).
However, the company posted an adjusted profit of 37 cents per share versus analysts' average estimate of 29 cents.
Tyson, the biggest US meat company by sales, has been cutting jobs, closing certain chicken processing units and is planning to sell its China poultry business according to sources, in an attempt to keep costs under control.
When CFO John Tyson was asked in an interview by Reuters on Monday whether the company would close more plants, he said "we continue to evaluate everything."
Tyson employed about 114,000 workers in US meat plants and other non-corporate sites like warehouses as of Sept. 30, down 3% from a year earlier, and 19,000 workers in other countries, up about 6%.
