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Tyson Foods Inc., the biggest U.S. meat company, reported better-than-expected fiscal second-quarter earnings and raised its sales forecast as beef markets strengthen and the company increases prices to pass through higher costs.
Adjusted earnings in Tyson’s fiscal second quarter were $1.34 a share, compared with the $1.12 average of analysts’ estimate. Sales were $11.3 billion, the Springdale, Ark.-based company said in a statement May 10. That compares with the $11.2 billion analysts had expected.
The company expects fiscal 2021 revenue of $44 billion to $46 billion. In February, Tyson said it expected revenue near the upper end of $42 billion to $44 billion.
“We’re seeing substantial inflation across our supply chain, which will likely create margin pressure during the back half of the year,” Tyson CEO Dean Banks said.
Red meat and poultry prices have been surging with restaurants and food-service outlets restocking and preparing for economies to return to normal from the coronavirus pandemic. Tyson in April opened its first new poultry plant in 25 years after the pandemic gave grocery store sales of chicken a boost.
Tyson, the maker of Jimmy Dean sausages, said “severe winter weather” contributed to reduction in the amount of hogs processed while chicken production was also impeded by the weather during the quarter.
Food companies have been hit with a shortage of truck drivers and workers at manufacturing plants. Tyson’s rival, the Pilgrim’s Pride Corp., recently said it was installing more automation at poultry plants due to the worker shortage.
Animal-feed costs have surged with robust Chinese demand and bad weather in key global-growing areas stoking fears of shortages in corn, soybeans and other commodities. Tyson said feed costs for chicken were $125 million higher compared to the second quarter of last year.
Tyson on May 3 announced a new vegan burger and other plant-based foods as the company seeks to compete with vegetarian-friendly upstarts including Beyond Meat and Impossible Burger.
Shares, which have climbed about 22% this year, rose in trading before regular exchange hours.
Tyson Foods ranks No. 1 on the Transport Topics list of Top Agriculture & Food Processing Carriers.
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