Meat processing giant Tyson’s stock price plunged more than 9% after the company said persistent inflation reduced consumer appetite for beef, pork and chicken purchases, weighing on second-quarter profits. It was the worst day for stocks since August.
Melanie Bouldin, head of Tyson’s prepared foods business, said lingering inflation, which has kept interest rates at their highest levels in more than 20 years, has pushed shoppers into kitchen rather than discretionary categories at grocery stores. They say they are prioritizing necessities.
“Consumers, especially low-income households, are under pressure,” Bolden told analysts on the latest earnings call. bloomberg Previously reported.
With cumulative inflation reaching 20% over the past three years, there have been “more cautious and price-sensitive consumers” in the retail industry, Bolden added.
The company’s stock price fell as much as 9.4% on the New York market following the earnings announcement, hitting its lowest level since March.
As of this writing, Tyson stock is trading at around $57.28, down 7.67% from the previous trading day.
According to Bloomberg, Chief Financial Officer John Tyson warned that uncertainties remain in the U.S. cattle supply and “primary commodity costs,” as well as “consumer strength and behavior.”
As a result, Tyson’s profits are likely to remain weak for several quarters to come.
The chief financial officer sought to allay investor concerns about the outlook for the third quarter after the stock price drop, saying executives “don’t want anyone to read too much into it.” Ta.
For the most recent three months ended March 30, Tyson said quarterly sales were down 8.3% and volume was down 6.1%, primarily due to lower production in the United States.
Meanwhile, adjusted net income was 62 cents per share, reversing a loss of 4 cents per share that the Arkansas-based company had reported. statement Published on Monday.
Second-quarter earnings beat analysts’ expectations of 39 cents, based on LSEG data.
According to Bloomberg, the earnings recovery was mainly due to the poultry business, which benefited from lower feed costs.
Despite this, producers are still grappling with increased chicken mortality and disease, said Tyson CEO Donnie King.
“We are not there yet in the chicken business,” he added.
Since early 2023, Tyson has closed six U.S. chicken plants and announced plans to further reduce employees and close a pork plant in an effort to improve performance and control costs.
With improvements in its poultry business on Monday, Tyson raised its forecast range for total adjusted operating income for fiscal 2024 from $1 billion to $1.5 billion to $1.4 billion to $1.8 billion.
Citi Research analyst Thomas Palmer said the raised expectations and quarterly profit weren’t all that surprising.
Tyson has been trying to turn around its chicken business for years, but it is struggling with a 2023 oversupply. Adjusted operating margin was 3.9% in the most recent quarter, compared to -3.7% in the same period last year, due to lower feed costs.
This is the first time in seven years since the second quarter that Tyson raised his profit outlook for the chicken division, according to JPMorgan.
Comes with post wire.
