The nation’s largest meat producer has warned of a tough few months after first-quarter profit forecasts were underperformed by lingering problems, including slowing demand for beef and rising costs.
Tyson Foods on Monday maintained its full-year earnings guidance but lowered its operating margin guidance for beef, pork and chicken.
CEO Donnie King said of the first quarter, “All our businesses saw market volatility, but the volatility was unpredictable and large.” This is the first time I’ve seen him work for a company,” he told analysts on the earnings call.
Chief Financial Officer John Tyson said the second quarter will be “seasonally weaker” than the first three months of the year, but a recovery is expected in the second half.
Declining demand for beef products in the United States led to a 6% year-on-year decline in beef segment sales and an 8.5% decline in average prices. King also said the cost of live cattle increased by about $530 million.
Tyson also produced too much fresh chicken, which ultimately forced it to cut prices to meet demand. Still, sales in the poultry division increased by 10% in the quarter, and prices increased by 7.1%.
Overall, revenue increased 2.5% year-over-year to $13.26 billion in the first quarter, but fell short of Wall Street’s estimate of $13.52 billion.
The Arkansas-based company earned 88 cents per share in the three months ended December. That’s below market expectations of $1.40 a share and well below last year’s first-quarter profit of his $3.07 a share.
Tyson shares fell 4.3% in Monday morning trading.
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