Tyson Foods Misses Target: Tyson Foods Inc. faced a challenging third quarter of fiscal 2022 as it failed to meet Wall Street’s forecasts, grappling with sliding chicken and pork prices, as well as reduced demand for its beef products. The disappointing performance resulted in a share decline of almost 8%, prompting Tyson to announce plans to close an additional four chicken plants in a bid to reduce costs.
During a conference call with analysts, CEO Donnie King addressed the situation, stating, “We are looking at everything in terms of how it works across the board.” Earlier this year, Tyson had already implemented layoffs and shuttered other chicken facilities due to decreasing profits and the financial pressures experienced by consumers amid inflation and higher interest rates.
Tyson Foods Misses Target: John R. Tyson, Tyson Foods’ Chief Financial Officer, highlighted that all three of the company’s main proteins, chicken, beef, and pork, encountered various macro and market issues. Net sales for the quarter ending on July 1st totaled $13.14 billion, falling short of Refinitiv’s projected $13.59 billion. Prices for pork and chicken dropped by 16.4% and 5.5% respectively, while beef prices saw a 5.2% increase.
In a statement released in July, Rabobank noted that “Domestic consumers continue to look for lower-cost protein alternatives, trading down from higher-cost proteins like pork or reducing overall protein consumption.”
Tyson Foods reported an overall loss of $417 million for the quarter, a stark contrast to the $750 million net income from the same period a year earlier. Adjusted earnings also underperformed, with 15 cents per share falling short of Refinitiv’s projected 26 cents per share.
The company faced challenges in 2021 when it wrongly anticipated high chicken demand in November and December, leading to a leadership change for the poultry branch in January. Despite the setbacks, CEO Donnie King expressed optimism about the future of the business, stating, “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.”
However, Tyson Foods is encountering diminishing profit margins in the beef sector due to depleted cattle herds and increased costs. As the company evaluates all its operations, it plans to close the four additional chicken plants over the course of fiscal 2024, incurring an estimated total charge of up to $400 million.
Tyson Foods’ third-quarter performance underscores the challenges faced by the meat and poultry industry, as reduced demand and lowered prices threaten profitability. The company now faces the task of navigating these issues and charting a course for future success.
Tyson Foods Q3 Results Fall Short of Expectations
Tyson Foods Inc is currently trading at
53.30 USD
−3.15 (5.58%) today.
