Beef division posts $142 million loss; sales volumes fall 16% as cattle costs rise $575 million
Tyson Foods lowered its profit outlook for the full year and reported a $142 million loss in its beef division for the fiscal third quarter, the company said. Cattle costs climbed $575 million compared with the same period a year earlier.
The company now expects its beef segment to report an adjusted operating loss of $500 million to $650 million for the fiscal year, wider than its prior outlook for a loss of $300 million to $500 million. For the full company, Tyson cut its adjusted operating-income forecast to between $2.1 billion and $2.3 billion, from a previous range of $2.2 billion to $2.4 billion.
The company’s beef sales volume fell 16% from a year earlier, even as the average selling price rose nearly 12%. Higher livestock costs are raising retail beef prices to record levels and curbing demand at a time when consumers are already strained.
Overall, the meatpacker reported a quarterly profit of $182 million, up from $61 million a year earlier. On an adjusted basis, Tyson earned 99 cents per share, slightly ahead of the 98 cents expected by Wall Street analysts, according to FactSet. Revenue was flat at about $13.87 billion, below what analysts had projected.
Tyson, which processes roughly one of every five pounds of chicken, beef and pork sold in the U.S., has leaned on its chicken business over the past year to keep profits stable. Strong demand for chicken products and low livestock costs had boosted its bottom line, but the company said an industrywide glut has eroded chicken processors’ profits in recent months.
Shares of Tyson fell about 3.8% in premarket trading.