Tyson Foods forecasts downbeat annual revenue, shares slide

By Granth Vanaik and Tom Polansek

(Reuters) -U.S. meatpacker Tyson Foods (NYSE:) on Monday forecast revenue for its next fiscal year below Wall Street estimates after fourth-quarter sales missed expectations due to falling chicken and pork prices and slowing demand for its beef products.

Shares fell 4% in premarket trading.

With higher food prices and interest rates pressuring household budgets, some American consumers have been cutting back on meat purchases.

Prolonged headwinds, such as declining U.S. cattle herds due to a lingering drought and high labor costs, have further strained margins for food companies.

Tyson said sales volumes in its beef business, its largest unit, fell 6.7% in the quarter ended Sept. 30, while prices rose by 10.2%.

The company’s costs to buy cattle to process into beef increased by about $2.1 billion in fiscal year 2023 from the previous year.

In fiscal year 2024, Tyson said its beef unit will have an adjusted operating loss of between $400 million and breakeven due to tight U.S. cattle supplies.

In contrast, chicken sales volumes rose 1.7% in the quarter as customers switched to cheaper alternatives from high-end proteins. But chicken prices, which hit a record high at U.S. grocery stores, dropped 9.2% in the quarter for Tyson.

The company expects total sales to be relatively flat in fiscal 2024 from the previous year’s $52.88 billion. Analysts on average expect sales of $54.40 billion, according to LSEG data.

The company’s fourth-quarter sales fell 2.8% to $13.35 billion. Analysts on average had expected sales of $13.71 billion.

However, the company posted an adjusted profit of 37 cents per share versus analysts’ average estimate of 29 cents.

Tyson, the biggest U.S. meat company by sales, has been cutting jobs and closing chicken processing plants to control costs, and sources said in August the company was planning to sell its China poultry business.

Chief Financial Officer John R. Tyson said in an interview on Monday that it is “business as usual” for the company in China. When asked whether the meatpacker will close more U.S. plants, he said “we continue to evaluate everything”.