The largest meat producer in the US warned of a tough few months ahead as issues such as softer demand for beef and higher costs, which caused it to miss first-quarter profit expectations, continue to linger.
Tyson Foods on Monday maintained its full year revenue outlook but cut guidance for its operating margins in beef, pork and chicken.
“We saw market swings across all business, and they were unpredictable and sizeable,” chief executive Donnie King said of the first quarter. “This is the first time I saw all markets work against us at the same time”, he told analysts on an earnings call.
Chief financial officer John Tyson said the second quarter would be “seasonally softer” than the first three months of the year, but a recovery was expected in the second half.
Beef segment sales fell 6 per cent from a year ago, and the average price dropped 8.5 per cent, because of a decline in demand for beef products in the US. King also said there was an increase of about $530mn in live cattle costs.
Tyson also produced too much fresh chicken, which it ultimately had to discount to keep up with demand. Still, sales in the chicken segment increased 10 per cent for the quarter with price increasing 7.1 per cent.
Overall, revenue rose 2.5 per cent from a year ago to $13.26bn in the first quarter but missed Wall Street estimates for $13.52bn.
The Arkansas-based company earned 88 cents per share in the three months to the end of December, which was below market estimates of $1.40 a share and far below last year’s first-quarter profit of $3.07 a share.
Tyson shares fell 4.3 per cent in mid-morning trading on Monday.