Meatpacking giant Tyson Foods on Monday posted lower profits in its first fiscal quarter compared with a year ago, pointing to a sharp decline in beef prices and waning demand for pork.
The company reported adjusted earnings per share of $0.85, falling far short of Wall Street estimates – analysts polled by Refinitiv had expected $1.34 per share. Sales climbed 2.5% in the quarter to $13.26 billion, but also missed analysts’ estimate of $13.52 billion.
“We faced some challenges in the first quarter,” Tyson CEO Donnie King said in a statement released with the results. “Market dynamics and some operational inefficiencies impacted our profitability.”
Tyson reported an 8.5% year-over-year drop in beef prices in the first quarter, while operating margins in the meat processor’s largest segment were squeezed to 3.5% from 19.1% the year prior.
Meanwhile, sales volumes for pork fell 7.4% on the year, while prices ticked up 1.4%.
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Although Tyson saw chicken prices rise 7.1% in the first quarter, the company lowered its outlook for operating margins in the segment to 2% to 4%, from 6% to 8%.
Credit Suisse said in a note following the earnings report that the results were “bad all around,” but King expressed optimism.
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“We expect to improve our performance through the back half of fiscal 2023 and into the future, as we strive to execute with excellence and work to become best in class in our industry,” Tyson’s chief executive said.
Reuters contributed to this report.