Tyson Foods (TSN) cut its annual profit forecast, blaming the uncertainty surrounding the brewing trade war as well as volatility in the market conditions, sending the shares of the food processing company down almost 7% on July 30. The stock continued to bleed on Tuesday’s regular trading session also.
As the Trump’s trade battle gets real, US companies are starting to feel the pinch. Meat sector and motorcycle makers were said to be among the worst hit. As the global trade war intensifies the two largest foreign buyers of US meat — Mexico and China — have each applied retaliatory tariff against the US meat pork products. In order to protect their business, companies are now taking strategic measures.
Tyson Foods, which specializes in chicken products, clipped its fiscal 2018 earnings target. The company now expects earnings on an adjusted basis to be around $5.70-6.00 a share compared to the prior estimate of $6.55-6.70.
The Springdale, Arkansas-based company cut down its guidance due to uncertainty in trade policies, increased tariffs that could negatively impact domestic and export prices — mainly chicken and pork, and increased volatility in the commodity markets.
“The combination of changing global trade policies here and abroad, and the uncertainty of any resolution, have created a challenging market environment of increased volatility, lower prices and oversupply of protein. We will continue to watch these conditions carefully,” said Tom Hayes, CEO.
Due to the reduced demand, the unsold meat piles up in the US. According to the Wall Street Journal, nearly 2.5 billion-pound surplus of meat has been piled up. Shares of Tyson Foods continued to trade in the negative territory and hit a new yearly low of $56.79 today.