Tyson Foods Sales Hit By Slowing Demand, Set To Shut Chicken Plants
Tyson Foods has fallen short of expectations set by Wall Street for its third-quarter revenue due to increased beef prices dampening demand for its products. Consequently, its shares experienced a decline of over 5% prior to the market opening.
As American consumers exercise more caution and curtail their meat purchases, pressures from elevated rent and interest rates on household budgets have negatively impacted sales for multinational meat processors like Tyson and Hormel Foods.
The leading U.S. meat processor, which had previously raised meat prices in the preceding year, disclosed a 3% reduction in net sales for the quarter, totaling $13.14 billion (€11.97 billion). This figure fell below analysts’ predictions of $13.59 billion (€12.38 billion) according to Refinitiv data.
Margins Face Strain
Tyson, the largest U.S. meat company in terms of sales, has also confronted margin pressures due to a decrease in U.S. cattle herds, resulting in higher livestock costs. Additionally, an ongoing drought has elevated expenses related to animal feeding.
In a strategic move to manage expenses, Tyson has undertaken measures such as job cuts and the closure of specific chicken processing units.
Tyson Foods announced on Monday that it plans to shutter four more chicken facilities in the U.S. in an effort to enhance cost efficiency and optimize capacity utilization.
Tyson’s net loss attributable to the company amounted to $417 million (€379.8 million), or $1.18 per share, for the reported quarter. This stands in contrast to a net income of $750 million (€683.1 million), or $2.07 per share, recorded in the same period the prior year.
Adjusting for specific factors, the company earned 15 cents per share in the quarter concluding on July 1.
In its quarterly statement, Tyson Foods reiterated its full-year revenue projection.