- Tyson Foods Q2 EPS 92 cents vs forecast 82 cents
- Q2 sales $13.07 billion vs forecast $13.14 billion
- Shares fall 2%
May 5 (Reuters) - Tyson Foods beat Wall Street expectations for second-quarter profit on Monday, driven by increased demand for its chicken products as well as lower costs.
Shares fell 2% in premarket trading after quarterly revenue fell short of estimates.
U.S. President Donald Trump's trade policies also hung over the meat company due to concerns that tariff disputes could dent domestic demand and American exports.
U.S. consumer sentiment ebbed for a fourth straight month in April amid worries over the economic impact of tariffs, and some consumers are already opting for less expensive meat products.
Tyson said that tariffs may lead to some sales disruptions and that exports account for less than 10% of its business.
Demand for its chicken rose as average prices declined 1.1% in the quarter that ended on March 29, while an 8.2% spike in beef prices hurt demand for steaks and other cuts.
Beef prices have climbed after U.S. ranchers slashed their cattle herds due to a years-long drought that dried up pasture lands used for grazing.
"While the beef segment remains challenged by tight cattle supply, margins in the chicken segment continue to improve, supported by strong demand," said Arun Sundaram, equity analyst at CFRA Research.
Tyson reported an adjusted operating loss of $149 million in its beef business, compared to a loss of $34 million a year earlier. Income in its chicken business jumped to $312 million from $160 million.
Overall Tyson earned 92 cents per share, compared with analysts' estimate of 82 cents, according to data compiled by LSEG. Quarterly net sales of $13.07 billion missed analysts' estimate of $13.14 billion.
The company reaffirmed its annual revenue forecast.
"Chicken has been resilient thus far, and we expect this to continue," Stephens said in a note.
Tyson increased its legal contingency accrual by $250 million for claims that its pork business was involved in price fixing, according to the regulatory filing.
Smithfield Foods, the biggest U.S. pork processor and a Tyson rival, said on Tuesday that China was no longer a viable market owing to retaliatory tariffs.
Reporting by Neil J Kanatt in Bengaluru and Tom Polansek in Chicago. Editing by Pooja Desai and Mark Potter
Source: Reuters