February 15, 2021

Tyson Foods reports lower than projected first quarter sales

Tyson Foods reported lower than projected first quarter sales due to low demand for meat at restaurants during the COVID-19 pandemic, sending the company's shares down 7.5%, Reuters reported.

Tyson Foods, the biggest meat company in the United States, expects meat demand to increase as COVID-19 vaccinations roll out in the country. It said higher meat sales at grocery stories aren't enough to offset the lower sales at food-service businesses.

The company's shares were last down 5.6% at US$65.40.

Tyson Foods' total quarterly sales volumes were 4.4% lower compared to a year earlier, plus a 7% decline in chicken. The company faces other issues such as higher corn and soybean costs and a lack of truck drivers.

Corn futures in the United States hit their highest price since June 2013 thanks to strong export demand, which is projected to drain domestic stockpiles in the country to its lowest in seven years.

Stewart Glendinning, chief financial officer for Tyson Foods, told analysts that the higher grains prices will affect the business.

Tyson Foods said increased prices for pork and chicken have helped to offset declining sales volumes. Overall sales were 3% lower to US$10.46 billion in the quarter.

The company's net income dropped about 8% to US$467 million or US$1.28 per share in the three months ended January 2, 2021. The company earned US$1.94 per share (excluding items), beating projections od US$1.49.

Tyson Foods raised its estimate for fiscal 2021 pandemic-related costs by about 33% to US$440 million, which includes COVID-19 testing and workers' protective equipment.

Glendinning said Tyson Foods' chicken plants have labour issues, as some of its US slaughterhouses were shut down temporarily last spring due to COVID-19.

- Reuters