By Granth Vanaik and Tom Polansek
(Reuters) -U.S. meatpacker Tyson Foods on Monday 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 premarket 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 U.S. cattle herds due to a lingering drought, have further strained margins for food companies.
Tyson said sales volumes in its beef business, its largest unit, fell 6.7% in the quarter ended Sept. 30, 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 U.S. meat company by sales, said its beef unit will have an adjusted operating loss of between $400 million and breakeven due to tight U.S. 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%.
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 U.S. chicken processing plants to control costs, and sources said in August the company was planning to sell its China poultry business.
Chief Financial Officer John R. Tyson said in an interview on Monday that it is “business as usual” in China. When asked whether the meatpacker will close more U.S. plants, he said “we continue to evaluate everything”.
Tyson employed about 114,000 workers in U.S. meat plants and other non-corporate sites like warehouses as of Sept. 30, down 3% from a year earlier, and 19,000 workers in other countries, up about 6%.
(Reporting by Granth Vanaik in Bengaluru and Tom Polansek in Chicago; Editing by Shailesh Kuber, Jan Harvey and Chizu Nomiyama)