RPT-UPDATE 2-Tyson Foods projects 2023 sales above estimates
(Repeats with updated story tag, no changes to text)
Nov 14 (Reuters) - U.S. meatpacker Tyson Foods Inc on Monday forecast 2023 sales above Wall Street estimates, signaling steady demand for its higher-priced chicken and beef despite soaring inflation.
Adjusted earnings in the quarter ended Oct. 1 missed analysts' expectations though, as the Springdale, Arkansas-based company reported negative operating margins in its pork business.
Food companies like Tyson are grappling with increased costs for items ranging from livestock feed to labor and assessing how much demand may suffer as they raise prices for consumers.
The maker of Ball Park hotdogs and Jimmy Dean sausages projected full-year 2023 sales between $55 billion and $57 billion, compared with analysts' expectation for $53.60 billion, according to IBES data from Refinitiv. Its revenue outlook was "surprisingly strong," JP Morgan analysts said in a note.
Analysts have raised concerns that higher prices will push more consumers to forgo pricey steaks for cheaper meats. Demand for premium cuts of beef declined in the fourth quarter compared with strong results a year earlier, with the average price down 8.2%, Tyson said.
In Tyson's pork business, operating margins declined 3.4% from a year earlier, as sales volumes and average prices fell. Tightening supplies of U.S. hogs and rising costs for labor and transportation hurt results, the company said.
Sales volumes of chicken, Tyson's second largest unit after beef, increased 1.1% in the quarter, even as Tyson raised prices by an average 18.2%.
Next year, "chicken prices likely will be down by a great degree and consumers will continue to trade down," JP Morgan analysts said.
Tyson shares rose about 1% in premarket trading. The company reported quarterly sales rose about 7% to $13.74 billion, topping analysts' average estimate of $13.50 billion.
Excluding items, Tyson earned $1.63 per share in the quarter, missing estimates of $1.73 per share. Tyson posted a quarterly operating margin of 5.6%, compared with 14.9% a year earlier. (Reporting by Ananya Mariam Rajesh in Bengaluru and Tom Polansek in Chicago; editing by Uttaresh.V, Shinjini Ganguli and Jonathan Oatis)
© Copyright Thomson Reuters 2022. Click For Restrictions - http://about.reuters.com/fulllegal.asp