Beef demand suffered from a strong dollar limiting U.S. beef exports and American consumers cutting back on beef purchases.
Nov 13 (Reuters) - Tyson Foods (TSN.N) on Monday forecast revenue for its next fiscal year below Wall Street estimates after fourth-quarter sales missed expectations due to falling chicken and pork prices and slowing demand for its beef.
Tyson's beef business, its largest unit, is struggling as U.S. cattle inventories have declined to decades lows, while its chicken and pork businesses grappled with excess supplies this year.
Demand also suffered from a strong dollar limiting U.S. beef exports and American consumers cutting back on some meat purchases as higher food prices and interest rates pressured household budgets.
"While the current operating environment remains difficult, we are making improvements across our operations," Tyson Chief Financial Officer John R. Tyson told analysts.
The company has been cutting jobs and closing U.S. chicken processing plants to control costs, and sources said in August the company was planning to sell its China poultry business.
John R. Tyson said in an interview it is "business as usual" in China and that the company continues to "evaluate everything" when it comes to more potential plant closures.
Tyson should have better year-over-year cash flow and profitability in its fiscal year 2024, which began Oct. 1, after seeing improvements in the second half of 2023, CEO Donnie King said.
Tyson reported adjusted operating margins of 1.8% in its chicken business in the quarter ended Sept. 30, after losses during the previous two quarters.
"We are encouraged by the sequential improvement this quarter and are optimistic that the protein market bottomed a few quarters ago," said Arun Sundaram, senior equity analyst at CFRA Research.
Tyson projected its beef business will have an adjusted operating loss of between $400 million and breakeven due to tight U.S. cattle supplies in fiscal year 2024. The unit's quarterly sales volumes fell 6.7%, while its prices climbed 10.2%.
Tyson expects total sales to be flat in fiscal 2024 from the previous year's $52.88 billion. Analysts on average expect sales of $54.40 billion, according to LSEG data.
"Guidance was well below the street across production segments," Bernstein analysts said.
Fourth-quarter sales fell 2.8% to $13.35 billion, below analysts' estimates for $13.71 billion. Adjusted profits were 37 cents per share versus analysts' expectations for 29 cents.