Tyson Foods Inc. plunged the most since March 2020 after the biggest US meat company cut its full-year sales forecast on what it described as “challenging” market conditions.
The company said it now sees revenue of $53 billion to $54 billion this year, below its earlier forecast of $55 billion to $57 billion. The midpoint of Tyson’s revised range is lower than the lowest of analyst estimates compiled by Bloomberg. Shares were down 13% to $52.78 at 9:34 a.m. in New York to its lowest since April 2020.
“I can’t remember a time when our business faced the highly unusual situation that we’re currently seeing, where all three of our core protein categories – beef, pork and chicken —- are experiencing market challenges at the same time,” Chief Executive Officer Donnie King said Monday on the company’s second-quarter earnings call.
Tyson and other meat producers have been squeezed by record-high cattle costs and elevated animal feed prices, just as inflation-hit consumers have been trading down to cheaper foods. That’s a shift from recent years, when disruptions linked to the Covid-19 outbreak resulted in record profits for meat companies.
“Challenging protein-market fundamentals and weaker-than-expected volumes mean adjusted operating margins in beef, pork and chicken may get worse before getting better,” Jennifer Bartashus, senior industry analyst at Bloomberg Intelligence, said of Tyson’s second-quarter earnings released Monday.
Tyson announced last month it was cutting 10% of its corporate staff and in March said it was shuttering two underperforming poultry operations in a bid to strengthen its chicken segment. The company posted increased poultry sales and a 2.9% decline in beef sales in the second quarter, according to its earnings report. Prices for pork dropped more than 10%.
(Updates shares and adds CEO comment in third paragraph.)
