February 8, 2023

Tyson Foods says larger beef and pork supplies weakened demand for its chicken

Executives for Tyson Foods, the biggest US meat company by sales, said larger-than-expected supplies of beef and pork weakened demand for its chicken, as the meatpacker missed Wall Street quarterly profit estimates, Yahoo! Finance reported.

The company's primary markets - beef, pork, and chicken - went in the opposite direction than expected, and executives were taken aback by how much meat was available in the US. Shares of Tyson Foods was down 4.8% at US$60.97 on February 6. 

The results demonstrate the compny's struggle to forecast meat demand in a high-inflation environment, as beef availability changes rapidly, and as drought in the western US forced ranchers to reduce cattle herds by slaughtering more animals.

Tyson Foods also faced larger-than-expected chicken supplies as the worst-ever US outbreak of bird flu triggered export restrictions, resulting in more poultry available domestically.

Donnie King, chief executive officer of Tyson Foods, said the company started planning in August to meet high demand for chicken in supermarkets in November and December. Meatpacking executives expected chicken to fill a gap in overall meat supplies caused by lower beef and pork production, he said.

Their predictions were incorrect. King said beef production was surprisingly high, forcing Tyson to resell excess chicken at a discount and spend money moving it.

Tyson Foods announced in January that Wes Morris would succeed David Bray as president of its poultry business.

According to Refinitiv IBES data, Tyson's first-quarter sales increased 2.5% to US$13.26 billion, falling short of analysts' average estimate of US$13.52 billion. Adjusted earnings of 85 cents per share were significantly lower than the US$1.34 per share expected.

-      Yahoo! Finance