9 August 2022

2 minute read

By: Global Ag Media

Tyson Foods shares fell 10% on Monday as the US meat processor reported weaker-than-expected quarterly earnings and warned of supply constraints and reduced demand for high-priced meat, reported Reuters.

Tyson said it raised meat prices to offset surging inflation, including $145 million of higher costs for feed ingredients in the April to June quarter.

"The beef segment is past its margin peak, and recent industry-wide pork processing margins have been soft," JP Morgan said in an analyst note.

Adjusted earnings per share were $1.94 for the quarter, missing estimates of $1.98.

Sales in Tyson's chicken unit were $4.37 billion, up 25% from a year earlier, as prices soared 20.1% and volumes eased.

Tyson has sought to improve performance in the chicken unit after struggling to meet demand to produce consistent results.

Global poultry meat prices reached an all-time high in July, while overall food prices edged further away from records hit in March, the United Nations food agency said last week.

Average sales prices for Tyson's beef dropped 1.2% in the quarter as demand eased for premium cuts, the company said. Sales volumes in beef, the company's largest segment, still increased 1.3%. The unit reported an adjusted operating margin of 10.2%, down from 12.7% in the previous quarter and 22.6% a year ago.

In Tyson's pork business, sales volumes and prices decreased amid reduced export and retail demand, the company said. Tyson lowered its forecast range for operating margins to 3% to 5% in fiscal 2022 from a previous estimate of 5% to 7%.

Overall, the Jimmy Dean sausage maker's quarterly sales increased to $13.50 billion from $12.48 billion a year earlier. Analysts on average had expected sales to be at $13.25 billion, according to IBES data from Refinitiv.