Tyson saw a 70% year-over-year decline in earnings per share in the last quarter as beef and pork sales fell, the company shared in its earnings report Monday.
In a call with analysts, CEO Donnie King said supply and demand dynamics in the retail meat space and higher cattle prices led to challenges throughout the quarter, with market fluctuations and operational issues leading to lower profits.
“We got hit in the mouth in Q1 because of all the protein on the market,” King said.
The entire company saw increased sales revenue for the quarter, at $13.26 billion, but it missed Wall Street expectations.
Weaker consumer demand for beef impacted the company’s overall standing, with sales declining 5.6% in the quarter, said John R. Tyson, the company’s executive vice president and CFO. There was higher than anticipated availability of beef products in the quarter, and the average price decreased 8.5%, King added. Adjusted operating income for the segment fell 87% compared to the first quarter of 2022, according to statistics shared in the company’s earnings presentation.
Tyson executives believed chicken would need to fill a gap caused by what they thought would be reduced beef and pork production, King said. But those forecasts were off.
“There was a lot more beef on the market than what we had expected particularly in light of increased cost of cattle,” King said. “So that was a bit of a surprise to us.”
The company saw greater success with its chicken products, which saw a 9.6% year-over-year increase in sales in the quarter. In the same period, prices increased 7.1%.
But while the company’s prepared foods division had a strong quarter, demand was weak with one product segment: fresh chicken. King said the company bet on higher demand for that segment, and that the next quarter’s profits will be softer.
“The only thing that went awry was the fact that the demand didn’t materialize in the place at retail in which we thought it would, and so that triggered a number of other inefficient moves and activities,” King said.
The company is “cleaning up some issues from Q1” as it enters the next quarter, and hopes to stabilize the price of beef and chicken, King said.
The CEO added that the company is ramping up its automation, scaling its chicken deboning technology across several plants.
In the meat giant’s previous quarterly earnings call in November, King said the company is eliminating “laborious, difficult, high turnover” jobs as its automation efforts increase.