Decline in sales and profits
Category headwinds
Tyson recorded the biggest revenue drop of 18% in its pork segment in Q3, which was driven by lower pricing due to softer demand. Price was down 16% while volumes fell 1.8%. As stated on the quarterly conference call, this segment continues to be impacted by market pressures in live operations, lower exports and the impact of a fire at one of its manufacturing facilities.
Sales in chicken fell 2% year-over-year in Q3. Price was down 5.5% but volume increased 2.8%. Commodity prices across most cuts remained significantly lower versus last year. The company also plans to close four additional chicken facilities this year.
In the beef segment, sales remained flat YoY. Price grew 5.2% while volume fell 5.3%. On its call, Tyson said it expects the beef industry to face headwinds as herd liquidation continues to tighten supply, leading to higher cattle cost, narrowing spreads and difficult export market conditions.
Outlook
For the full year of 2023, total sales are expected to be $53-54 billion. Tyson expects to come at the lower end of this guidance range with roughly flat sales growth for the year. Within the beef segment, the company expects adjusted operating margin to be down 1% to up 1% in FY2023.
Adjusted operating margin in the pork segment is expected to be down 2-4% while in the chicken segment, it is expected to be down 1% to up 1% for the year. For prepared foods, the company expects adjusted operating margin of 8-10%.