By Tom Polansek and Granth Vanaik
(Reuters) -Tyson Foods missed Wall Street expectations for third-quarter revenue and profit on Monday, hurt by falling chicken and pork prices as well as slowing demand for its beef products.
Shares sank about 8% as the company said it is evaluating all operations and closing four more U.S. chicken plants in the latest bid to reduce costs.
“We are looking at everything in terms of how it works across the board,” CEO Donnie King told analysts on a call.
Tyson has already cut corporate jobs and shuttered other chicken plants this year as it struggles with declining profits and reduced demand from consumers squeezed by inflation and higher interest rates.
The company hiked prices last year to offset spiraling feed and labor costs, but has been hit in 2023 by lower prices in core protein segments. Executives have also struggled to predict demand and previously said reduced demand for beef made it difficult to pass on higher costs to consumers.
“Chicken, beef and pork all face different types of macro and market challenges,” Chief Financial Officer John R. Tyson said in an interview.
Net quarterly sales fell 3% to $13.14 billion in the quarter ended July 1, below analysts’ expectations of $13.59 billion, according to Refinitiv data. The company’s average sales prices fell 16.4% for pork and 5.5% for chicken, while rising 5.2% for beef.
“Domestic consumers continue to look for lower-cost protein alternatives, trading down from higher-cost proteins like pork or reducing overall protein consumption,” Rabobank said in July.
Tyson expects the closing chicken plants to stop operating in its first two quarters of fiscal 2024, with charges of $300 million to $400 million.
Last year, the company wrongly predicted demand for chicken would be strong at supermarkets in November and December, King has said. In January, Tyson replaced the president of its poultry business.
“If you look at the chicken business today versus where we were just a quarter ago, there are more tailwinds than headwinds in the chicken business in the near to long term,” King said Monday.
In the beef business, Tyson faces reduced profit margins as a diminishing U.S. cattle herd raises costs for livestock.
Net losses attributable to Tyson were $417 million, or $1.18 per share, compared with a net income of $750 million, or $2.07 per share, a year earlier.
On an adjusted basis, Tyson earned 15 cents per share, falling short of analysts’ expectations for a profit of 26 cents per share, according to Refinitiv data.
(Reporting by Granth Vanaik in Bengaluru and Tom Polansek in Chicago; Editing by Milla Nissi, Louise Heavens and Anna Driver)
