Tyson Foods earnings miss forecasts as slaughterhouse fire hurts beef sales

Publisher: The Insight Partners

Tyson grappled with the fire as the global meat industry focused on increasing sales China, where an outbreak of a fatal pig disease has slashed pork production. U.S. producers have been hampered due to tariffs imposed by Beijing as part of the countries’ trade war.

The fire at the Holcomb, Kansas, slaughterhouse in August left restaurants, food service companies and grocery chains scrambling to buy beef from other facilities.

As a result, volumes in Tyson’s business fell 4.2% in the fourth quarter to Sept. 28, with sales down 1.3%. The fire also resulted in $31 million of net incremental costs, the company said.

Still, profit margins for U.S. beef processors set record highs after the fire as beef prices climbed. At the same time, cattle prices tanked because the fire temporarily eliminated a key buyer of livestock, prompting a U.S. government investigation into the market. Tyson’s operating margins for beef were 9.7%, up from 8.9% a year earlier. Margins declined in its pork, chicken and prepared foods units.

Excluding items, the company earned $1.21 per share, compared with the average analyst estimate of $1.29, according to IBES data from Refinitiv.

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