May 9, 2023
Tyson Foods shares plummet as lower meat prices hurt company's revenue
Tyson Foods, announced disappointing quarterly results, due to lower demand for pork and beef, which sent prices spiraling downwards as consumers became wary of inflation, Washington Post reported.
The company also struggled with higher costs for feed, cattle, and other items. It's shares dropped by 16.4% and close at US$50.73.
Donnie King, chief executive officer of Tyson Foods, said that all four of the company's major protein businesses are experiencing unusual challenges.
Beef prices fell 5.4% in the second quarter due to lower demand in the US, while pork decreased 10.3% because of softer global demand. John R Tyson, chief financial officer of Tyson Foods, said many of the headwinds they are experiencing are likely to persist through the fiscal year.
Tyson Foods is one of four companies that dominate beef, pork, and poultry processing in the US. Although demand for animal protein surged in 2021 and 2022, sales have slowed as consumers are less willing or less able to pay for it.
In the second quarter, Tyson Foods posted a loss of US$97 million, compared to earnings of US$829 million in the year-ago period. The company reported US$13.1 billion in sales for the three months ended April 1, which is nearly flat from the previous year.
For 2023, the Arkansas-based company expects sales in the US$53 billion to US$54 billion range, which is lower than its previous forecast of US$55 billion to US$57 billion. Tyson Foods has been in cost-cutting mode for months, with plans to lay off 10% of its corporate workforce and 15% of its senior management positions, and the closure of two plants in Arkansas and Virginia.
The decline in meat prices comes at a time when inflation is easing across the economy. The US Bureau of Labor Statistics said prices rose 5% in the year ending March, which represents the smallest 12-month increase since May 2021.
- Washington Post