Tyson Foods Witness Stronger Sales with the Rise in Meat Prices, Restaurant Demand Jump
Tyson Foods Inc. (TSN.N) announced stronger-than-expected quarterly earnings on Monday and anticipated improved revenue for the year ahead, owing to the rising meat prices that helped the company overcome pandemic-related labour shortages at its plants.
Despite a 20% spike in cattle prices, the Springdale, Arkansas-based company reported a double-digit increase in sales and profitability in the fiscal fourth quarter ended October 2, including a record quarter in its beef sector. Pent-up demand for dine-in experiences, newer meat items on restaurant menus, and a boom in Chinese demand for United States pork and beef have also worked in favour of the American meat-processing firms.
Tyson shares were up by around 4% in mid-morning trading. Tyson reported about USD 335 million in direct costs in fiscal 2021 related to COVID-19, including protective equipment, testing, and vaccinations for employees. The total did not include indirect costs such as higher meat product inputs, transportation, and plant inefficiencies that have soaring consumer meat prices.
Rising meat prices and improving demand from restaurants have boosted the United States meat companies, including Tyson, after the COVID-19 pandemic kept many diners at home last year. Meatpackers have also seen record demand for American beef from China amid diplomatic tensions between Beijing and supplier Australia. However, increased costs for labour, transportation, and items such as feed grain and packaging have created headaches.
CEO Donnie King stated that inflation had a significant impact on the business. As rates of inflation continue, so will the pricing actions. Top aides to the United States President Joe Biden blamed Tyson and other large meat rivals that control much of the meat processing sector for rising food prices. Tyson has rejected those assertions and instead blamed the pandemic and the United States labour shortage for limiting production.
The Jimmy Dean sausages maker said it was expecting sales of USD 49 billion to USD 51 billion for fiscal 2022, compared with market estimates of USD 47.99 billion, according to Refinitiv IBES. Sales rose to USD 12.81 billion in the fourth quarter from USD 11.46 billion a year earlier. Analysts, on average, were expecting sales of USD 12.66 billion.
Tyson's net income increased to USD 1.36 billion, or USD 3.71 per share, from USD 654 million, or USD 1.79 per share, a year earlier. Excluding one-off items, Tyson earned USD 2.30 per share, compared with estimates of USD 2.03. In the third quarter, Tyson Foods Inc raised its forecast for fiscal 2021 revenue and reported higher-than-expected earnings due to strong demand for its beef products.