Tyson Foods raises meat prices to outrun higher supply costs

[CHICAGO] Tyson Foods Inc said it is expanding efforts to boost productivity as a tight labour market and smaller livestock herds prompt the biggest US meat company to raise prices for consumers.

Tyson is targeting US$1 billion in productivity savings by the end of fiscal 2024 and US$300 million to US$400 million in fiscal 2022, relative to a fiscal 2021 cost baseline, said a statement Monday.

The company is kicking off earnings for meat producers, with rising prices for beef, pork and poultry helping offset pressure from tight labour markets that have impeded production and hit supplies. Tyson has been investing to build new chicken plants and increase use of automated technology to boost output. "We're pleased with the results of the first quarter and of the steps that we are taking to improve productivity," chief executive officer Donnie King said in the statement.

The company reported adjusted earnings per share of US$2.87 a share for the fiscal first quarter, compared with US$1.94 a year ago. The average of analysts' estimate compiled by Bloomberg was US$1.93. Sales for the quarter were US$12.9 billion, compared with estimates for US$12.2 billion.

For the quarter, beef prices jumped by 32 per cent with chicken up about 20 per cent and pork 13 per cent.

Shares rose 3.3 per cent before the start of regular trading in New York.

Meat companies including Tyson have been under scrutiny from the Biden administration for the tightly concentrated industry in which a small handful of companies turn big profits while consumers pay higher food prices and farmers lose out on their share. The meat industry blames a lack of labour, high transportation costs and strong consumer demand for the upward pressure on prices.

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