US trade war hampers Tyson Foods’ 2018 financial outlook

The US trade war is set to impact the business’ domestic and export prices, particularly in the chicken and pork sector, while increased volatility in the commodity markets has resulted in a greater-than-expected increase in the domestic supply of proteins and lower sales prices.

Other areas addressed by the company included imbalances in supply and demand, which are set to compress pork margins. Domestic chicken demand was also described as being “sluggish”​ by the business due to the pricing of competing proteins.

The business has made efforts to enhance its chicken sector after acquiring organic chicken brand Tecumseh Poultry LLC​ and a new processing plant in Tennessee​ last month.

Despite the pressures, the business remained optimistic and said it would mitigate the pressures in the “challenging market​”.

“Our beef and prepared foods businesses are performing very well, and I believe the diversity of our portfolio of proteins and brands has given us some level of insulation from challenging market conditions​,” said Tyson Foods president Tom Hayes.

“Our forecasted earnings range reflects the current market volatility in meat prices. 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​.”

In May, the business predicted its fiscal 2018​ sales to grow approximately 6% between $40bn and $41bn.

Tyson Foods’ first half-year results saw rising costs in labour and transport impact its sales as its operating income fell by 8% year-on-year.