Tyson Food CEO Donnie King

Tyson Foods feeling the pressure

Tyson Foods, America’s largest meat company, has been hit by inflation, with rising costs and a tight labor market weighing on sales of chicken and pork.

The owner of Hillshire Farm and Ball Park Hot Dogs on Monday reported third-quarter adjusted earnings per share that he reported at $1.94. Shares fell 9.8%, the biggest intraday drop since March 2020.

Mr. Tyson, who lives in Springdale, Arkansas, said in a statement that meat sales have slowed as consumers have been pressured by higher prices.

Pork and poultry sales declined in the most recent quarter. Beef sales increased in the third quarter but are still down this year. Still, total revenue for the quarter of $13.5 billion beat estimates of $13.31 billion.

Robust demand for meat supported Tyson, but fears of a recession fueled by rising inflation prompted shoppers to switch from premium his steaks to cheaper meats and eat out less.

Related artice: Meat inflation’s breaking records

Rising feed costs

At the same time, rising feed costs are pushing farmers to reduce their herds, which could push cattle and hog prices higher in the coming months, said Tyson CEO Donnie King. “There will be more packers chasing these cows,” he said. “It gets very close”

Pork Cut Tyson reiterated its guidance for fiscal 2022 revenues of $52 billion to $54 billion, but cut its estimated profit margin for its pork segment in May from 5% to 7% to 3% to 5%. The outlook for poultry no longer included expectations because of a “strong performance in the second half of the year.”

Related article: Will further consolidation lead to higher poultry prices?

King was appointment CEO in 2021

Tyson’s results were “a little brighter than we had hoped, but they pointed us in the right direction with regards to returning profitability in the poultry division,” said Stephens Inc.

Tyson and other meat processors are under fire over rising meat prices that are leading to the worst food inflation in 40 years. “We were unable to reach an agreement with the New York Attorney’s Office on a price-increasing subpoena,” Tyson said in a securities filing.

Tyson’s debacle follows last month’s better-than-expected profits for Pilgrims Pride Corporation, the second-largest US poultry producer after Tyson.

Related article: Drought drives cattle ranchers to liquidate herd

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Source: Bloomberg

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