Hillshire Farm and Jimmy Dean brands owner Tyson said it expects its annual revenue to reach US$44bn to $46bn, up from its previous forecast in the upper end of a $42bn to $44bn range.
“Given continued strength in the beef segment and our expectations for ongoing foodservice recovery, we are raising our sales guidance for the full year,” CFO Stewart Glendenning said yesterday (10 May), as Tyson reported its second-quarter financial results yesterday. Sales for the three months ended 3 April rose around 4% to $11.3bn from a year earlier. Net income was up from $379m to $477m.
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Speaking to analysts after the results were published, Tyson CEO Dean Banks suggested future growth forecasts are linked to a recovery in the foodservice channel, which has suffered as a result of forced closures of outlets during the Covid-19 pandemic.
“We saw improvement in the foodservice channel during the quarter. We’ve been working closely with our customers to support foodservice recovery. As consumer demand patterns continue to create operational complexities, we’ve taken action to make our organisation more responsive to demand signals and customer needs to accelerate our speed to market,” he said.
Glendenning said foodservice sales improved $69m in the second quarter.
“Foodservice recovery was most evident during the second quarter in higher chicken and prepared foods sales versus the same period last year,” he said. “In prepared foods, we are seeing recovery in foodservice foot traffic and strong sales into the distribution channel.”
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By GlobalDataHowever, Tyson warned that rising costs for labour, transport and raw materials such as grain and packaging will hit profits later this year
“We’re seeing substantial inflation across our supply chain, which will likely create margin pressure during the back half of the year,” Banks said.
Tyson lifted its margin forecast for its beef business, which are now expected to be up year-on-year, versus flat to down slightly previously.
In a note to clients, AllianceBernstein analyst Alexia Howard said: “Clearly the next few quarters will be tough for the chicken business due to spiking input costs. Management noted that retailers are being amenable to allowing pricing to be passed through but given the level of cost pressure, this is still likely to weigh on margins going forward. Prepared Foods is also expected to see some margin pressure due to rising input costs. Having said that, there was encouraging news on the pick up in foodservice demand this quarter, which should help to buoy volumes in this segment.”
