Tyson Trims Sales Forecast on Lower Meat Prices -- Update
November 13 2018 - 12:23PM
Dow Jones News
By Jacob Bunge and Micah Maidenberg
Tyson Foods Inc. expects meat prices to face continued pressure
over the next year, as the U.S. protein industry grapples with
rising supplies and trade disputes, executives said.
Lower meat prices led the Arkansas-based company to reduce its
2019 sales forecast by $1 billion to $41 billion. The company
expects a continued boom in beef profits to offset challenges
facing its poultry and pork divisions, keeping its profit steady in
fiscal 2019.
Tyson, the largest U.S. meat supplier by sales, this year has
dealt with rising freight costs, swinging agricultural commodity
markets and trade disputes that have pushed domestic meat
stockpiles higher.
While Tyson has been able to raise prices on some of its own
products and its beef and pork export volumes have been strong,
pressure on prices will continue, said Noel White, Tyson's chief
executive.
"We expect another good year, but not without challenges," Mr.
White said Tuesday on a conference call.
U.S. production of poultry and red meat are set to rise this
year by a combined 2.4%, according to U.S. Agriculture Department
estimates. New and expanded processing plants are projected to
drive pork and chicken production to record levels this year, while
beef supplies have also grown. That has ramped up competition
between products such as ground beef and chicken breasts in grocery
store meat cases and on restaurant menus.
For the year ahead, Tyson projected that its adjusted profit
would be $5.75 to $6.10 a share, comparable to 2018's level. That
projection, Tyson Chief Financial Officer Stewart Glendinning said,
depended on no major shifts in the cost of grain required to feed
poultry and livestock, and no further deterioration in chicken
prices.
Tyson shares fell 6.7% to $57.40 in morning trading Tuesday.
Tyson said Tuesday it booked $9.99 billion in sales during its
fiscal fourth quarter, less than the $10.3 billion analysts polled
by FactSet were expecting.
Overall, the company said average prices for its products fell
4.1% during the quarter.
For the period ended Sept. 29, Tyson reported a profit of $537
million, or $1.47 a share, compared with $394 million, or a $1.07 a
share, a year earlier. On an adjusted basis, Tyson earned $1.58 a
share, compared with expectations of $1.33 a share.
Write to Jacob Bunge at jacob.bunge@wsj.com and Micah Maidenberg
at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
November 13, 2018 12:08 ET (17:08 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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