© Reuters. FILE PHOTO: Tyson Foods brand frozen chicken wings are pictured in a grocery store freezer in the Manhattan borough of New York City, U.S. May 11, 2017. REUTERS/Carlo Allegri/File Photo

By Tom Polansek and Praveen Paramasivam

(Reuters) -Tyson Foods warned on Monday that rising costs will hit profits later this year even though the U.S. meatpacker raised its full-year revenue forecast on higher meat prices and improving demand from restaurants.

Increased costs for labor, transportation and raw materials like grain and packaging are squeezing a range of companies including Tyson, the biggest U.S. meat company by sales.

Tyson’s costs for feed ingredients rose $135 million from a year ago in the second quarter as corn and soybean prices soared on supply concerns. [GRA/]

The company also spent $60 million more buying chicken from other producers due to raw materials shortages, said Donnie King, president of the poultry unit.

Globally, food prices in April were at their highest level since May 2014.

Expectations for further cost increases pushed Tyson to lower its forecast for prepared foods sales to flat from last year.

“We’re seeing substantial inflation across our supply chain, which will likely create margin pressure during the back half of the year,” Chief Executive Dean Banks said.

Still, Tyson said it expects fiscal 2021 revenue to reach $44 billion to $46 billion, up from a previous forecast for revenue in the upper end of a $42 billion to $44 billion range.

Sales in the quarter ended April 3 rose about 4% to $11.30 billion from a year earlier, exceeding analysts’ estimates for $11.19 billion, IBES data from Refinitiv showed.

Shares rose 2% in afternoon trading.

In beef, Tyson’s largest business, sales rose 1.7% from a year ago to $4 billion, as prices climbed 7.5% and volumes fell 5.8%.

Tyson said it will pass on increased costs to customers and now expects its beef division to post improved results compared to last year.

The company must also overcome labor hurdles. King said worker absences are up some 50% from before the pandemic and it now takes six days to do five days’ worth of work in meat plants.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





Source link