Tyson shares slump most in two years as inflation hits meat sales

Bloomberg

Tyson Foods Inc, the biggest US meat company, is getting hit by inflation with soaring costs and a tight labour market squeezing sales of chicken and other meat.
The owner of Hillshire Farm and Ball Park hot dogs posted adjusted earnings of $1.94 a share for its third quarter, narrowly missing the $1.98 average estimate of analysts surveyed by Bloomberg. Shares fell as much as 9.8%, the biggest intraday tumble since March 2020.
Springdale, Arkansas-based Tyson in a statement said meat sales were slowing with high prices pinching consumers. Chicken sales dropped in the latest quarter; beef sales, while higher volume-wise in the third quarter, are still down for the year to date.
Still, total sales in the quarter of $13.5 billion topped estimates for $13.31 billion.
Robust demand for meat has been carrying Tyson, but recession fears sparked by elevated inflation have been prompting shoppers to start to trade down from premium steaks to cheaper cuts and to curb visits to restaurants. At the same time, rising costs for feed has prompted farmers to scale back herds, which will likely raise prices for cattle in the months ahead. The American cattle herd is already the smallest since 2015.
“You’re going to have more packers chasing these head” of cattle, Tyson Chief Executive Officer Donnie King said. “That’s going to be very tight.”
Tyson in its outlook reiterated expectations for sales in fiscal-year 2022 of $52 billion to $54 billion and its chicken
outlook no longer included expectations for a “stronger performance in the second half of the year.”
Tyson’s miss follows better-than-expected earnings last month from Pilgrim’s Pride Corp, the second-biggest US chicken producer after Tyson.
“The turnaround of our chicken business continues, and we continue to be the market share leader in many of our retail business lines,” said King, who was appointed CEO in 2021 in part to overhaul the chicken segment that had
been underperforming after a new male chicken had fertility issues.