Ongoing price pressures on the US poultry sector have prompted Tyson Foods to reduce its sales forecast by $1bn in 2019, leading to a fall in its share prices.
While the company expects to see a boost in beef profits, Tyson has been hit by trade disputes that have pushed domestic meat stockpiles higher, swinging agricultural commodity markets and rising transport costs.
The company reported fiscal fourth quarter revenue that missed expectations and gave weak guidance. Revenue fell by 1% compared to last year but sales volumes in the chicken sector climbed by 10% due to intense promotional activities. However, this was at the expense of a 7% price decline, which hit overall revenue figures.
Noel White, Tyson Foods president and CEO, described the figures as solid: “We exceeded our revised guidance due to a strong finish in the fourth quarter in the beef and pork segments. Prepared Foods drove margin expansion, while the chicken segment closed the gap from earlier in the year with increased promotional activity.”
The figures released yesterday followed an interview given by Mr White to the Wall Street Journal, where he said the Arkansas-based company was considering acquisitions in new markets and revamping its strategy in China, where earlier investments have struggled.
Mr White, who took over the role at the end of September, has said the firm’s largest opportunities for growth were in its international business and value-added foods. Its acquisition for $2.16bn of Keystone Foods in August, which supplies McDonalds, will help the company do both.
Keystone, part of Marfrig Global Foods, has particularly strong business ties in the Asia Pacific region but also exports to key markets in Europe, the Middle East and Africa.