Sales volumes in Tyson’s beef segment also fell, putting overall sales down 8.3% at $4.62 billion.
Elevated feed costs and drought have driven cattle producers to send animals to slaughter instead of keeping them for breeding, forcing meatpackers to compete to buy fewer livestock.
Tyson’s costs to buy live cattle increased $305 million and its beef unit’s operating margins fell to 0.2% from 12.7% a year earlier. The company pegged full-year beef margins at negative 1% to positive 1%, compared with its previous forecast of 2% to 4%.
Beef margins were Tyson’s worst since 2015, while pork margins were the worst in more than two decades at negative 2.2%, JPMorgan analyst Ken Goldman said.
In Tyson’s chicken business, margins were negative 3.7% as feed costs jumped by $145 million. The unit’s adjusted operating income swung to a loss of $166 million from profits of $203 million a year earlier as Tyson recorded $92 million in charges related to the planned closure of two processing plants this month.
Higher chicken feed costs were a “particular disappointment,” Goldman said, as grain prices have moderated.
Tyson posted an overall adjusted loss of 4 cents per share, below analysts’ expectations for an 80-cent profit. A year earlier, earnings were $2.29 per share.
“Many of the headwinds experienced are likely to persist for the remainder of the fiscal year,” Chief Financial Officer John R. Tyson said.
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