Tyson Foods raises annual sales forecast as U.S. meat prices soar – Metro US

Tyson Foods raises annual sales forecast as U.S. meat prices soar

FILE PHOTO: Tyson Chicken Nuggets, owned by Tyson Foods, are
FILE PHOTO: Tyson Chicken Nuggets, owned by Tyson Foods, are seen for sale in Queens, New York

By Tom Polansek and Deborah Mary Sophia

(Reuters) -Tyson Foods Inc raised its full-year sales outlook on Monday as soaring meat prices drove its quarterly revenue and earnings above expectations.

Meatpackers have come under scrutiny from the White House and Congress over prices, with the Biden administration blaming a lack of competition in the sector for increases.

Tyson, the biggest U.S. meat company by sales, said it has hiked prices to offset rising costs for labor and goods like animal feed.

Globally, food prices hit a record high in March as the war in Ukraine has disrupted shipments of grains used for feed.

Rising beef prices are pushing some consumers to buy cheaper cuts, though overall meat demand remains strong, Tyson Chief Executive Donnie King said.

“The supply chain and the consumer is more inelastic than what we had modeled in,” he told reporters.

Shares touched a one-week high and ended up 2.2% as the broader market weakened.

Tyson projected annual sales of $52 billion to $54 billion, above its prior estimate for the upper end of a $49 billion to $51 billion range. Analysts on average expect $51.79 billion, according to Refinitiv IBES data.

The Arkansas-based company also raised its forecast for its beef unit’s profit margins to 11% to 13%.

President Joe Biden is concerned U.S. meat conglomerates are too dominant in the industry, White House press secretary Jen Psaki said.

“They have this capacity and ability to jack up prices and pass those on to consumers when they should not,” Psaki said.

The Biden administration has announced steps to increase competition in the meat sector as the White House is fighting inflation.

Tyson received a subpoena dated April 21 from the New York attorney general’s office seeking information on meat prices, sales and production costs, the company said in a regulatory filing. Tyson is evaluating the subpoena, the filing said.

Average prices for Tyson’s beef climbed by 23.8% in the quarter that ended on April 2, compared to a year earlier, the company said. Chicken prices jumped 14.4% and pork prices rose 10.8%.

“Looking ahead, we have concerns about consumers shifting away from meat and/or downtrading,” said Michael Lavery, senior research analyst for Piper Sandler, in a note.

The company’s costs are up 23% for cattle and 20% for grain, King said.

Higher grain prices increased the quarterly feed bill in Tyson’s chicken business by $100 million from a year earlier, according to the company.

“We are asking the customer and ultimately the consumer to pay for the inflation that we’re seeing throughout the supply chain,” King said.

Quarterly sales rose to $13.12 billion from $11.30 billion a year earlier, beating expectations of $12.85 billion. Adjusted earnings per share were $2.29, up from $1.34 a year ago and above estimates for $1.91.

(Reporting by Deborah Sophia in Bengaluru and Tom Polansek in Chicago; Additional reporting by Alexandra Alper in Washington; Editing by Aditya Soni and Lisa Shumaker)

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