Tyson Foods Inc. plunged the most since the 2008 global financial crisis after the biggest US meat company cut its full-year sales forecast amid “challenging” market conditions.
(Bloomberg) — Tyson Foods Inc. plunged the most since the 2008 global financial crisis after the biggest US meat company cut its full-year sales forecast amid “challenging” market conditions.
The company said it now sees revenue of $53 billion to $54 billion this year, below the prior 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 16% to $50.94 at 2:15 p.m. in New York for the day’s second-worst performance in the S&P 500 Index.
“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 during a quarterly earnings call on Monday.
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 margin guidance for the full year, according to a 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.
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“Clearly the depths of this cycle across multiple segments is shaping up to be more severe than anticipated,” Stephens Inc. analyst Ben Bienvenu wrote in a note. “Earnings are clearly approaching a trough.”
(Updates share price in second paragraph, adds analyst comment in fifth paragraph.)
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