US meatpacker Tyson Foods recently forecast revenue for its next fiscal year below Wall Street estimates after fourth-quarter sales missed expectations due to falling chicken and pork prices and slowing demand for its beef.
Shares slid 2.5% in pre-market trading.
With higher food prices and interest rates pressuring household budgets, some American consumers have been cutting back on meat purchases.
Prolonged headwinds, such as declining US cattle herds due to a lingering drought, have further strained margins for food companies.
Sales Volumes
Tyson said that sales volumes in its beef business, its largest unit, fell 6.7% in the quarter ended 30 September, while prices rose by 10.2%.
The company's costs to buy cattle to process into beef increased by about $2.1 billion in fiscal year 2023 from the previous year.
Tyson, the biggest US meat company by sales, said that its beef unit will have an adjusted operating loss of between $400 million and breakeven due to tight US cattle supplies in fiscal year 2024.
"Guidance was well below the street across production segments," Bernstein analysts said.
Chicken sales volumes rose 1.7% in the latest quarter as customers switched to cheaper alternatives from high-end proteins, though prices dropped 9.2%.
Forecasts
The company expects total sales to be flat in fiscal 2024 from the previous year's $52.88 billion.
Analysts on average expect sales of $54.40 billion, according to LSEG data.
Tyson's fourth-quarter sales fell 2.8% to $13.35 billion, below analysts' estimates for $13.71 billion.
Adjusted profits were 37 cents per share versus analysts' expectations for 29 cents.
Tyson has been cutting jobs and closing US chicken processing plants to control costs, and sources said in August the company was planning to sell its China poultry business.
'Business As Usual'
Chief financial officer John R. Tyson said in a recent that it is "business as usual" in China.
When asked whether the meatpacker will close more US plants, he said "we continue to evaluate everything".
Tyson employed about 114,000 workers in US meat plants and other non-corporate sites like warehouses as of 30 September, down 3% from a year earlier, and 19,000 workers in other countries, up about 6%.
Read More: Tyson Foods Plans To Sell China Poultry Business: Reports
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