(Reuters) -Tyson Foods beat Wall Street expectations for second-quarter profit, driven by increased demand for its chicken products as well as lower costs, and reaffirmed its annual revenue forecast on Monday.
Shares of the company fell 1.5% in premarket trading after it narrowly missed quarterly revenue estimates.
It witnessed sustained demand for its frozen meat and ready-to-eat food as consumers increasingly preferred eating at home.
Robust growth in Tyson’s chicken segment at its restaurant and food service channels helped the company offset stubbornly high beef prices due to low U.S. cattle supplies.
However, it faces challenges as consumer sentiment in the United States ebbed for a fourth consecutive month in April, in anticipation of a surge in product prices due to President Donald Trump’s tariff policies.
Tyson said recent changes in trade policies and tariffs may lead to some sales disruptions as its exports account for less than 10% of its business, the company disclosed in a filing on Monday.
It also warned that tariffs and trade disputes affect the pricing of commodities and raw materials, and in turn lead to additional costs for the company and its suppliers.
Smithfield Foods, the biggest U.S. pork processor and a Tyson rival, said on Tuesday that China was no longer a viable market owing to retaliatory tariffs. Beijing’s additional tariffs push China’s effective duty rate on U.S. pork to 172%, according to industry data.
On an adjusted basis, Tyson earned 92 cents per share for the quarter ended March 29, compared with analysts’ estimate of 82 cents, according to data compiled by LSEG.
Quarterly net sales of $13.07 billion missed analysts’ estimate of $13.14 billion.
Tyson increased its contingency accrual by $250 million for claims that its pork business was involved in price fixing, according to the regulatory filing.
Sales in its beef segment, the company’s largest, were up 4.9% in the quarter. Prices were up 8.2%, while volumes declined 1.4%.
Adjusted operating margin at its chicken segment rose to 7.5% from 3.9% in the year-ago quarter, while its pork business rose to 3.7% from 2.2% a year ago.
(Reporting by Neil J Kanatt in Bengaluru and Tom Polansek in Chicago; Editing by Pooja Desai)
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