Tyson Falls After Cutting Sales Outlook Amid High Meat Costs

(Bloomberg) — Tyson Foods Inc. plunged the most since March 2020 after the biggest US meat company cut its full-year sales forecast on what it described as “challenging” market conditions.

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The company said it now sees revenue of $53 billion to $54 billion this year, below its earlier forecast of $55 billion to $57 billion. The midpoint of Tyson’s revised range is lower than the lowest of analyst estimates compiled by Bloomberg. Shares fell 15% to $51.38 at 11 a.m. in New York to its lowest intraday price in more than three years.

“I can’t remember a time when our business faced the highly unusual situation that we’re currently seeing, where all three of our core protein categories – beef, pork and chicken —- are experiencing market challenges at the same time,” Chief Executive Officer Donnie King said Monday on the company’s quarterly earnings call.

Tyson and other meat producers have been squeezed by record-high cattle costs and elevated animal feed prices, just as inflation-hit consumers have been trading down to cheaper foods. That’s a shift from recent years, when disruptions linked to the Covid-19 outbreak resulted in record profits for meat companies.

The protein producer posted an unexpected loss in its second quarter and also cut its margin guidance for the full year, according to its Monday earnings statement. A 3.3% increase in sales was less than analysts expected, with a 2.9% drop in beef revenues blunting higher volumes for chicken and pork.

“This was a far worse quarter than we (or the Street) expected, for reasons not yet entirely clear to us,” Ken Goldman, an analyst at JPMorgan Chase & Co., said in a note. He added that Tyson paid more to feed its chickens than a year ago, even though “most observers were expecting this item to be much less of a headwind.”

(Updates shares and adds analyst comment in fifth paragraph.)