(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 the latest bid to reduce costs. Shares were down nearly 6% premarket.
Tyson has already cut corporate jobs and shuttered other chicken plants this year as it struggles with declining profits and reduced demand from consumers squeezed by inflation and higher interest rates.
The company hiked prices last year to offset spiraling feed and labor costs, but has been hit in 2023 by lower prices in core protein segments, such as pork. The company has also struggled to predict sales and previously said reduced demand for beef made it difficult to pass on higher costs to consumers.
“Chicken, beef and pork all face different types of macro and market challenges,” Chief Financial Officer John R. Tyson said in an interview. “That’s persisted for a little while.”
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.
“Domestic consumers continue to look for lower-cost protein alternatives, trading down from higher-cost proteins like pork or reducing overall protein consumption,” agricultural lender Rabobank said in July.
Tyson expects the closing chicken plants to stop operating in the company’s first two quarters of fiscal 2024. It estimates total charges of $300 million to $400 million from the closures.
Tyson wrongly predicted last year that demand for chicken would be strong at supermarkets in November and December, Chief Executive Donnie King said in February. In January, the company replaced the president of its poultry business.
In the beef business, Tyson faces reduced profit margins as a diminishing U.S. cattle herd forces packers to pay more for livestock. Lingering drought conditions limit the amount of pasture available for grazing.
Net losses attributable to Tyson were $417 million, or $1.18 per share, in the reported quarter, compared with 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.