Tyson Foods reported lower-than-expected first-quarter sales on Feb. 11. amid weak meat demand at restaurants during the pandemic.
The biggest U.S. meat company by sales expects demand will improve as COVID-19 vaccinations prompt people to eat out more often. So far, though, increased meat sales at grocery stores have not been enough to offset the decline at food-service businesses.
Shares were last down about 5.6 per cent at $65.40.
Tyson’s total quarterly sales volumes dropped 4.4 per cent from a year earlier, including a seven per cent decline in chicken, according to the company. It faces additional challenges from surging costs for corn and soy, which are used for animal feed, and from a shortage of truck drivers, executives said.
U.S. corn futures this week reached their highest price since June 2013 as strong export demand is expected to drain U.S. stockpiles to the smallest in seven years.
“The change in pricing in grains has been nothing less than enormous, and that is going to weigh on the business,” chief financial officer Stewart Glendinning told analysts on a call.
Higher chicken and pork prices helped offset declines in sales volumes, according to Tyson. Overall sales fell about three per cent to US$10.46 billion in the quarter, missing a Refinitiv IBES estimate of US$10.84 billion.
Net income attributable to Tyson fell nearly eight per cent to US$467 million, or US$1.28 per share, in the three months ended Jan. 2.