Profit rose more than expected at Tyson Foods Inc. TSN 9.85% in the three months through December, with strong demand and higher pricing offsetting challenges the meatpacker has faced from labor shortages and rising costs.
Shares gained more than 5% in premarket trading Monday as Tyson’s profit beat Wall Street’s forecasts and the company reiterated its outlook for sales growth in fiscal 2022. Tyson said it is expecting revenue to come in near the top of a previously issued guidance range projecting $49 billion to $51 billion in sales this fiscal year.
Staffing challenges and higher costs for hogs, cattle and feed ingredients persisted into the last three months of 2021, Tyson said. Nonetheless, operating margins rose in Tyson’s segments that produce beef and pork as the company raised prices.
Overall, Tyson’s quarterly sales reached $12.93 billion, a rise from $10.46 billion in the same three-month period a year earlier. Per-share earnings more than doubled to $3.07, or $2.87 after adjusting for one-time items.
Analysts surveyed by FactSet were expecting sales of $12.17 billion and adjusted earnings of $1.93 a share.
Tyson, which also produces brands such as Jimmy Dean, Hillshire Farm and Ball Park, sold 3.6% more chicken by volume year over year, backed by greater production and brisk demand. Pork volumes were roughly flat year over year, while beef volume was down by 6.2%.
Sales rose in each of those categories as Tyson raised prices. The company increased beef prices the fastest, by nearly a third year over year. Chicken prices were 20% higher, while pork prices rose 13%.
Rising costs for companies and consumers alike have made inflation an especially critical barometer of the economy’s health in recent months. Investors, executives and economists are watching price trends closely as they weigh how the Federal Reserve will manage monetary policy this year, with a series of benchmark-rate increases widely anticipated to begin in March. January data for the consumer-price index is set to be released Thursday morning.
Meatpackers such as Tyson have been dealing with tight staffing in recent months, as coronavirus infections and related issues such as child-care needs kept workers at home. The trend has led Tyson to offer higher wages. In December, the company said it also plans to spend about $1.3 billion on automation over the next three years, aiming to reduce hard-to-fill vacancies.
Tyson said Monday it expects to devote about $2 billion to capital investments this year, including for automation.
Write to Matt Grossman at [email protected]
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