Meat giant Tyson Foods Inc. reported Tuesday that quarterly profit rose 5.6 percent on rising chicken and beef prices. Analysts expected higher profit from chicken and higher pork. But profit was pressured as its cattle supply dwindled.
Company sales dipped 2.4 percent to $11.04 billion, while adjusted earnings were 79 cents a share, a penny below analysts’ estimates.
Animal protein prices have been rising after U.S. sanctions against Russia and additional Chinese tariffs halted the export of U.S. pork and beef to the Asian country. Tyson, like other meat producers, wants to diversify and grab a larger share of Asian customers, which make up more than 20 percent of its sales.
The North Little Rock, Arkansas-based meat giant remains heavily invested in its boxed-beef and packaged-chicken businesses, which accounted for 54 percent of its sales and 60 percent of its profit last year. It plans to announce a $1 billion investment over the next five years to expand its beef supply chain, while sharply boosting investments in poultry.
The company is also chasing acquisitions to be more competitive with vertically integrated rivals like Pilgrim’s Pride Corp. — Tyson operates some 200 small but extensive meat operations. Tyson said last year that it would acquire a foreign meat-processing business to increase its presence in China.
Meat prices have been rising in the U.S. since November. Soybean futures have surged on concerns that trade wars between the U.S. and China could dampen demand for soybeans, the country’s biggest import.
Pork prices are on the rise too, with Brazilian pork supplies tightening after anti-corruption probes shut down operations in the country and producers were forced to suspend operations or suspend or shut down their factories.
In its latest quarter, Tyson raised prices for chicken by 2.5 percent, but overall net income declined 8.5 percent to $345 million, or $1.21 a share, as its cost of sales increased.