Tyson misses earnings estimate

U.S. meat company say soaring prices pinching consumers

Tyson Foods Inc., the biggest U.S. meat company, is getting hit by inflation with soaring costs and a tight labour market squeezing sales of chicken and pork.

The owner of Hillshire Farm and Ball Park hot dogs posted adjusted earnings Monday of $1.94 a share for its third quarter, narrowly missing the $1.98 (U.S.) average estimate of analysts surveyed by Bloomberg. Shares fell as much as 4.9 per cent in early New York trading, to close at $80.10.

Arkansas-based Tyson in a statement said meat sales were slowing with high prices pinching consumers. Pork and chicken sales dropped in the latest quarter; beef sales, while higher volume-wise in the third quarter, are still down for the year to date. Still, total sales in the quarter of $13.5 billion topped estimates for $13.31 billion.

Robust demand for meat has been carrying Tyson, but recession fears sparked by elevated inflation have been prompting shoppers to start to trade down to cheaper cuts and to curb visits to restaurants.

“Results in the quarter a little light of what we were hoping to see, but again trended in the right direction in the recovery of chicken segment profitability,” Stephens Inc. analysts including Ben Bienvenu wrote in a note.

Tyson in its outlook reiterated expectations for sales in fiscal-year 2022 of $52 billion to $54 billion but it cut estimated margins in the pork segment to between three per cent and five per cent, down from five per cent to seven per cent in May, and its chicken outlook no longer included expectations for a “stronger performance in the second half of the year.”

Tyson’s miss follows better-thanexpected earnings last month from Pilgrim’s Pride Corp., the secondbiggest U.S. chicken producer after Tyson.

“The turnaround of our chicken business continues, and we continue to be the market share leader in many of our retail business lines,” said Tyson chief executive officer Donnie King, who was appointed 2021 in part to overhaul the chicken segment that had been underperforming after a new male chicken had fertility issues.

Tyson and other meat packers have been under fire for high meat prices that have been a major contributor to the worst food inflation in four decades.