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Tyson stock falls as beef costs spike and chicken demand wanes

Shares of Tyson Foods (TSN) fell on Monday after the company missed estimates in its latest quarterly results.

Adjusted earnings per share came in 70% lower year-over year, at $0.85, far below expectations of $1.33. Revenue slightly missed expectations of $13.52 billion, with a reported $13.26 billion.

On a call with analysts, CEO and President Donnie D. King said, "Market dynamics and some operational inefficiencies impacted [our] profitability."

Weakened consumer demand caused prices to fall for many products, which resulted in Tyson paying more and having more in supply.

"The average sales price was down 8.5% due to softer domestic demand for beef," John R. Tyson, Tyson Foods CFO said on the company's earnings call.

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Beef sales for the mega food processor came in at $4.7 billion, down 5.6% compared to a year ago. Higher cattle costs, up $530 million, also hit the company.

"We saw higher cattle prices as beef herd numbers continue to decline. We will continue to monitor the beef cutout value and balance our supply with customer demand during a period of margin compression while pushing volume growth in case-ready and premium branded products," Tyson said.

WASHINGTON, DC: A man shops in the meat section at a grocery store. (Photo by Drew Angerer/Getty Images)
WASHINGTON, DC: A man shops in the meat section at a grocery store. (Photo by Drew Angerer/Getty Images) (Drew Angerer via Getty Images)

Tyson Foods remains bullish on beef though. "We have reasons to believe in our long-term outlook for beef. This outlook is supported by our investment in strategic supplier relationships that provide higher quality beef, a growing global demand, specifically in Asia, and the strengthening drop credit as well as opportunities to shift our beef products up the value pyramid."

Pork also brought down the recent quarter. In that segment, sales were down 6% to $1.5 billion. Pork's average sales price was up 1.4%, while volume was down 7.4%.

Chicken sales posted a record high of $4.3 million, up 9.6% from last year. A 2.5% increase in volume and 7.1% gain in pricing drove sales higher.

However, CEO King said, "a few different things didn't go as planned" within its chicken segment.

"Most notably, demand didn't appear in the parts of the market where we had expected. As a result, we had to move things around, and we experienced higher costs, a lower price environment and knock-on effects from a network standpoint," King said.

For fiscal 2023, the company maintained its total company sales guidance of $55 billion to $57 billion, which implies 3% to 7% sales growth.

"We anticipate these factors easing in the back half of 2023 as beef availability lessons and total poultry harvest normalizes, providing support for improvement in our chicken prices. The fall in commodity chicken prices driven by heightened protein supply in the market and seasonal demand weakness does not change our strategy," Tyson noted in the call.

Shares of Tyson Foods are down more than 31% from a year ago.

Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.

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