Tyson Foods
stock was falling sharply after the meat company posted a surprise loss in its fiscal second quarter—the result of trouble in its chicken business—and lowered its forecast for annual revenue.
Tyson
(ticker: TSN) posted a second-quarter adjusted loss of 4 cents a share, much worse than earnings of 79 cents a share analysts had penciled in. Earnings a year earlier were $2.29 a share.
Sales for the quarter were $13.1 billion, about flat from the year-ago period.
The chicken segment posted an $166 million adjusted loss for the quarter, compared with a profit of $203 million in the year-earlier quarter.
“Commodity prices for most fresh chicken cuts are much lower than last year,” President and CEO Donnie King said on a call to discuss the results, explaining that the commodity markets dynamics “work through on a lag.”
“As chicken commodity prices declined in Q1, the impact continued into our Q2, while price increases we saw during the quarter are expected to affect Q3,” he added. The cost of ingredients for feed rose from a year ago, he said, while concerns over avian influenza meant “key export markets remain closed.”
Tyson lowered its forecast for fiscal 2023 revenue to a range of $53 billion to $54 billion from the $55 billion to $57 billion it had predicted earlier.
In a research note Monday, CFRA Research analyst Arun Sundaram maintained his Hold rating on the stock but cut his price target to $59 from $65, writing that “the quarter was disappointing as it’s clear the macro environment is not in favor of protein processors.”
Tyson stock fell 16% to $51.08 on Monday. That put it on pace for its largest percentage decrease since November 2008, when it fell 24%, according to Dow Jones Market Data. It is also the second-worst performer in the S&P 500.
“While the current protein market is challenging, we have a strong growth strategy in place and are bullish on our long-term outlook,” said King in the earnings release. “We saw strong performance in our branded foods business and continue to be laser-focused on meeting customer needs and planning the future with them.”
The earnings report isn’t the only hint of the company’s recent struggles. In late April, The Wall Street Journal reported that Tyson was slashing 15% of its senior leadership positions and 10% of corporate roles, citing a memo sent to employees.
Write to Emily Dattilo at [email protected]
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