Tyson Foods Inc. Shares Drop, Beef and Pork Weighing Them Down

Aug 07, 2012

Tyson Foods Optimistic Despite Shares Drop

Tyson Foods Inc. one of the world’s largest processors of chicken, beef and pork had their company shares fall 4.5 per cent to $14.7 in the second quarter in the New York Stock Exchange. The weaker than expected sales earnings are related to the beef and pork segments of the business with chicken sales remaining profitable.

The U.S. drought is expected to continue to exacerbate the sales drop, with higher feed costs causing input costs of grain to skyrocket hurting projected earnings over the next year.

"While we ultimately expect to pass along rising input costs, these costs, coupled with continued soft demand, are likely to pressure earnings in 2013," says Donnie Smith, Chief Executive of Tyson Foods Inc.

While the undesirable market conditions are putting a toll on Tyson’s beef and pork business, their chicken sales are not expected to feel the dent, despite higher feed costs.

With beef and pork experiencing weaker than expected sales growth, the company is optimistic that beef will be profitable but their profit margins will fall below the company’s typical range. The uncertainty rests with the consumer and their interpretations of the correlations between the U.S. drought causing meat prices to rise. If consumers are sympathetic to this correlation, the demand should remain steady. Looking at grocery store sales for meat products, beef and pork sales were down while chicken sales remained steady. The global giant continues to stay on top of consumer trends seeing more people buying less expensive cuts of meats rather than stopping consumption of pork, beef and chicken products all together.

Tyson has readjusted their projections expecting sales of $33 billon which is $1 billon dollars less compared to their first quarter projections.

Video: Evolution of Beef Cattle Farming

The Clear Conversations podcast took to the road for a special episode recorded in Nashville during CattleCon, bringing listeners straight into the heart of the cattle industry. Host Tracy Sellers welcomed rancher Steve Wooten of Beatty Canyon Ranch in Colorado for a wide-ranging discussion that blended family history and sustainability, particularly as it relates to the future of beef production.

Sustainability emerged as a central theme of the conversation, a word that Wooten acknowledges can mean very different things depending on who you ask. For him, sustainability starts with the soil. Healthy soil produces healthy grass, which supports efficient cattle capable of producing year after year with minimal external inputs. It’s an approach that equally considers vegetation, animal efficiency, and long-term profitability.

That philosophy aligned naturally with Wooten’s involvement in the U.S. Roundtable for Sustainable Beef, where he served as a representative for the Colorado Cattlemen’s Association. The roundtable brings together the entire beef supply chain—from producers to retailers—along with universities, NGOs, and allied industries. Its goal is not regulation, Wooten emphasized, but collaboration, shared learning, and continuous improvement.