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Meat processor Tyson Foods cuts profit forecast on mounting tariff pressures
[BENGALURU] Tyson Foods Inc cut its full year profit forecast on Monday citing uncertainty in trade policies and increased tariffs, which has hurt domestic and export prices, specifically for chicken and pork.
The increased volatility in the commodity markets due to China's tariff measures has led to greater-than-expected increase in the domestic supply and lower sale prices of proteins such as beef and pork, Tyson said.
Demand for chicken in the United States, as a result of drop in prices of competing proteins, has taken a hit.
Shares of the No 1 US meat processor's shares were down 5 per cent at US$60.30 in premarket trading.
For fiscal 2018, Tyson now expects adjusted earnings per share of about US$5.70-US$6.00, down from its earlier forecast of US$6.55-US$6.70.
Analysts' on average were expecting the company to earn US$6.53 per share, according to Thomson Reuters I/B/E/S.
"We still face pressure on chicken sales volume and pricing due to the abundance of relatively low-priced beef and pork on the market," Chief Executive Officer Tom Hayes said.
"Our fourth quarter is off to a slower than expected start driven primarily by market related factors," he added.
Tyson Foods' move comes as China implemented a 25 per cent duty on most US pork items on April 2 in response to US tariffs on Chinese steel and aluminum products.