By Granth Vanaik and Tom Polansek
Tyson Foods on Monday forecast revenue for its next fiscal year below Wall Street estimates after missing fourth-quarter revenue expectations, hit by falling chicken and pork prices as well as slowing demand for its beef products.
Shares of the company fell 1.2% in premarket trade.
With higher food prices and interest rates pressuring household budgets, American consumers have been cutting back on meat purchases, hurting sales at companies such as Tyson and Pilgrim's Pride.
Prolonged headwinds such as declining U.S. cattle herds due to a lingering drought as well as high labor and raw material costs, have further strained Tyson's margins.
The company said that volumes at its beef segment, its largest, fell 6.7% in the quarter ended Sept. 30, while prices rose by 10.2%.
In contrast, chicken volumes rose 1.7% in the quarter as customers switched to cheaper alternatives from high-end proteins. But chicken prices, that have hit a record high at U.S. grocery stores, dropped 9.2% in the quarter for Tyson.
The U.S. meat packer expects sales to be flat in fiscal 2024 as compared with the total sales of $52.88 billion it posted in fiscal 2023. Analysts, on average, expect sales of $54.40 billion, according to LSEG data.
The company's fourth-quarter sales decreased 2.8% to $13.35 billion. Analysts, on average, had expected sales of $13.71 billion.
However, the company posted an adjusted profit of 37 cents per share versus analysts' average estimate of 29 cents.
Tyson, the biggest U.S. meat company by sales, has been cutting jobs, closing certain chicken processing units and is planning to sell its China poultry business according to sources, in an attempt to keep costs under control.
When CFO John Tyson was asked in an interview by Reuters on Monday whether the company would close more plants, he said "we continue to evaluate everything."
(Reporting by Granth Vanaik in Bengaluru and Tom Polansek in Chicago; Editing by Shailesh Kuber)
