The recent rally in grain markets has pushed up the cost of animal feed in the US and eroded profit margins for Tyson Foods, the largest meat company in the US. Announcing half-year results this week, Tyson also said that higher freight and transport costs as a result of a booming US economy and rising oil prices were also hitting profit margins.
For the three-month period to the end of March 2018, Tyson recorded an 8% increase in sales to $9.8bn (€8.2bn). However, operating profits in the same period fell by 13% to $498m (€420m) as profit margins tightened from 6.3% to 5.1%.
Tyson saw the biggest erosion of profits in its beef and pork divisions. Operating profits in its beef section fell by 27% to $92m (€78m) as a result of higher finished cattle prices in the US so far this year. Tyson said it sold almost 2% more beef in the quarter due to strong demand and increased exports.
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In its pork division, Tyson saw profits more than halve (-52%) to $67m (€57m) as margins compressed from 10.8% last year to 5.3%. Again, the meat processor blamed higher pig prices for the fall in profits and squeezed margins.
In its chicken division, Tyson said its feed costs rose by $100m in the second quarter of the financial year. This reduced profit margins from 8.3% to 7.8%.
Tyson chief executive Tom Hayes described the trading conditions in 2018 as challenging.
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The recent rally in grain markets has pushed up the cost of animal feed in the US and eroded profit margins for Tyson Foods, the largest meat company in the US. Announcing half-year results this week, Tyson also said that higher freight and transport costs as a result of a booming US economy and rising oil prices were also hitting profit margins.
For the three-month period to the end of March 2018, Tyson recorded an 8% increase in sales to $9.8bn (€8.2bn). However, operating profits in the same period fell by 13% to $498m (€420m) as profit margins tightened from 6.3% to 5.1%.
Tyson saw the biggest erosion of profits in its beef and pork divisions. Operating profits in its beef section fell by 27% to $92m (€78m) as a result of higher finished cattle prices in the US so far this year. Tyson said it sold almost 2% more beef in the quarter due to strong demand and increased exports.
In its pork division, Tyson saw profits more than halve (-52%) to $67m (€57m) as margins compressed from 10.8% last year to 5.3%. Again, the meat processor blamed higher pig prices for the fall in profits and squeezed margins.
In its chicken division, Tyson said its feed costs rose by $100m in the second quarter of the financial year. This reduced profit margins from 8.3% to 7.8%.
Tyson chief executive Tom Hayes described the trading conditions in 2018 as challenging.
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