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(Reuters) -Tyson Foods missed Wall Street expectations for third-quarter revenue and profit on Monday, hurt by falling chicken and pork prices as well as slowing demand for its beef products.
The company said it is closing four more U.S. chicken plants in a bid to reduce costs. Shares were down nearly 6% premarket.
Some consumers have been turning more cautious and pulling back on meat purchases as inflation and higher interest rates squeeze household budgets, hurting sales at multinational meat producers like Tyson and Hormel Foods.
The company has struggled to predict sales and previously said reduced demand for beef made it difficult to pass on higher costs to consumers.
Net quarterly sales fell 3% to $13.14 billion, below analysts’ expectations of $13.59 billion, according to Refinitiv data. The company’s average sales prices fell 16.4% for pork and 5.5% for chicken, while rising 5.2% for beef.
Tyson has eliminated U.S. jobs and already shut two chicken processing plants in a bid to reduce costs. The additional plants are slated to close next year, the company said.
Tyson faces reduced profit margins for beef processing as a diminishing U.S. cattle herd forces packers to pay more for livestock, while lingering drought conditions limit the amount of pasture available for grazing.
“Domestic consumers continue to look for lower-cost protein alternatives, trading down from higher-cost proteins like pork or reducing overall protein consumption,” Rabobank said in July.
Net loss attributable to Tyson was $417 million, or $1.18 per share, in the reported quarter, compared to a net income of $750 million, or $2.07 per share, a year earlier. On an adjusted basis, the company earned 15 cents per share in the quarter ended July 1.
Reporting by Granth Vanaik in Bengaluru and Tom Polansek in Chicago; Editing by Milla Nissi
