The meat company heavyweight recently announced that it has lowered its earnings forecast for the current period ahead of fourth quarter close. Tyson Foods stated multiple “short-term challenges” to have weighed on its bottom line, including: volatile commodity prices, food-safety initiatives, a Kansas beef plant fire, and slower-than-expected operational changes in its chicken business in its fiscal fourth quarter.
“The discrete challenges we’ve encountered this quarter now lead us to believe we will fall short of our previously stated guidance,” Chief Executive Noel White said in a written statement.
According to The Wall Street Journal, Tyson cut its adjusted earnings guidance for fiscal 2019 from a range of $5.75 to $6.10 a share to a range of $5.30 to $5.70 a share; shares were reported to have fallen by 6.2 percent in after-hours trading on Tuesday to $87.50.
Mr. White said he remains optimistic about fiscal 2020 because he doesn’t expect some of the challenges—like the summer’s big swings in corn prices—to repeat themselves. He also said Tyson’s portfolio is generating strong sales volumes.
The WSJ also states that Tyson is pivoting its 84-year-old meatpacking company to more-profitable prepared and packaged foods in a bid to distance itself from the traditional meat business’s boom-and-bust cycles.
Tyson’s main business is processing beef, chicken, and pork. Overall record of red-meat and poultry production nationwide is pushing down prices and eroding Tyson’s meat-processing profit margins. Tariffs and trade barriers to U.S. meat have also dented prices, building up backlogs as transport and labor costs continue to climb.
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