Tyson Foods shares set record as high meat prices fatten profits
Reuters
Published Feb 07, 2022 07:37AM ET
Updated Feb 07, 2022 12:26PM ET
By Tom Polansek and Ananya Mariam Rajesh
(Reuters) -Tyson Foods Inc shares climbed more than 11% to an all-time high on Monday after the company reported that first-quarter profits nearly doubled due to soaring U.S. meat prices.
Shares rebounded from a one-month low on Friday to reach a record $99.20, up 14% from the start of the year.
The surge reflects strong demand and high prices for Tyson's beef, pork and chicken, as U.S. labor shortages have limited production.
"Customer demand continues to outpace our ability to supply product," Chief Executive Donnie King said.
Increased prices and profits threaten to amplify Washington's scrutiny of the U.S. meatpacking industry, as the Biden administration has criticized a lack of competition in the sector.
Tyson and three other industry behemoths slaughter about 85% of grain-fattened cattle carved into steaks for consumers.
The average price for Tyson's beef surged 31.7% in the quarter ended on Jan. 1, while the unit's operating margins jumped to 19.1% from 13.2% a year ago. Average prices for all of Tyson's products climbed by 19.6%.
Overall sales for beef soared about 25% to $5 billion, helping Arkansas-based Tyson's sales rise 24% to $12.93 billion in the quarter. Analysts, on average, were expecting revenue of $12.18 billion, according to IBES data from Refinitiv.
Net income attributable rose to $1.12 billion and excluding items, Tyson earned $2.87 per share, beating estimates of $1.95 per share.
Tyson said it raised meat prices to offset higher costs for labor, transportation and grains used for animal feed. Its cost of goods rose by 18% in the quarter, and King told reporters he expects grain prices will continue to rise.
To respond, Tyson restructured its chicken pricing strategy to make it more flexible and has asked customers to pay for freight rates that jumped 32%, King said.
"They're dealing with a very inflationary environment across kind of all their businesses," said Adam Samuelson, lead agribusiness analyst at Goldman Sachs (NYSE:GS).
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.