Tyson Foods has downgraded its earnings forecast in its fiscal fourth quarter, citing a combination of market conditions and internal mishaps.
Tyson cut its projected earnings for the current fiscal year from $5.75-$6.10 per share to $5.30-$5.70 per share. It cited as causes volatility in overseas trade conditions, a fire that shut down a Kansas beef processing plant, and recalls of millions of pounds of chicken this spring and summer over concerns they were contaminated with plastic and metal.
Paradoxically, a drop in the price of corn, a main feed source for the animals Tyson processes, hurt the company because it worked against positions Tyson held in grain markets. That accounted for 30% of the earnings cut, CEO Noel White said in a statement.
“The discrete challenges we’ve encountered this quarter now lead us to believe we will fall short of our previously stated guidance,” White said, “but our outlook for fiscal 2020 remains positive as we believe some of the challenges we’re experiencing are not expected to repeat, and we’re expecting more favorable market conditions as well.”
In another matter, Tyson announced that it is acquiring a minority stake in a processor of plant-based analogue shellfish. New Wave Foods makes substitute shrimp from seaweed, soy protein and natural flavors.
The dollar amount of the investment or percentage of the stake were not revealed, except that it amounts to less than 20% of New Wave Foods. Tyson divested a stake in Beyond Meat, an analogue meat company, shortly before Beyond Meat's IPO in May.