The company said the revised outlook was primarily driven by significant margin compression amid volatile cattle prices and one of the most severe cattle shortages in U.S. history.
Tyson now expects fiscal 2026 adjusted operating income of $1.85 billion to $2.05 billion, compared with $2.1 billion to $2.3 billion it forecast on August 3. It also expects fiscal 2026 revenue growth of 1.5% to 2.0%, compared with 2.5% to 3.5% expected last month.
"The guidance cut really highlights how difficult the cattle cycle continues to be for Tyson and the broader beef industry," said Freddy Lavric, portfolio manager at Winthrop Capital Management, which owns Tyson shares.
Beef market pressures and company actions
The beef industry has been a focus recently of President Donald Trump, whose Justice Department is probing high prices. Trump signed a proclamation last week aimed at increasing U.S. imports of ground beef in a bid to bring down prices for consumers ahead of midterm elections in November. The average price of lean and extra lean ground beef reached $8.41 per pound in July, up more than 38% from five years ago, according to government data.
Trump's order has driven down U.S. cattle prices, angering ranchers and reducing the value of inventories that meat companies previously purchased. Tyson did not comment on the order but cited "the expected impact of lower cattle prices on the value of live cattle inventories" as a reason for lowering its forecast.
Tyson shuttered a massive beef plant in Nebraska this year and slashed operations at another facility in Texas. In August, Tyson said it would also close or sell three of its beef plant and packaging operation sites. The actions should begin reducing operating cost pressures as the company enters fiscal year 2027, CEO Donnie King said.
"We view today’s guidance reduction as further evidence that near-term beef conditions have remained more challenging than previously anticipated despite the company’s aggressive capacity actions," Stephens analyst Pooran Sharma said.
Tyson cuts outlook as beef pressure worsens
Sept. 3 (Reuters) - Tyson Foods cut its annual profit forecast for a second time within a month on Thursday as tight U.S. cattle supplies, volatile prices and cautious consumer spending put further strain on its struggling beef business.
Meatpackers have been bleeding money in their beef units as high costs for scarce cattle have outpaced benefits from record-high beef prices. Tyson eliminated thousands of meatpacking workers this year through plant closures intended to improve results, but said its beef business faced additional pressures in the quarter that ends in September.
Tyson's shares were down about 7% on Thursday afternoon. Shares of meatpackers Smithfield Foods and Pilgrim's Pride were down about 2%.
Cautious consumers weigh on foodservice demand
Beef prices soared after a persistent drought in the western U.S. burned up grazing lands and forced ranchers to reduce their herds. Washington further tightened supplies over the past year by suspending cattle imports from Mexico in an attempt to keep out a flesh-eating livestock pest. The U.S. resumed imports last month on a limited basis.
Trump last year accused meatpacking companies of driving up prices through manipulation and collusion, and ordered the Justice Department to investigate.
Consumers facing high prices are cautious about discretionary spending, creating a more difficult environment for demand at foodservice outlets, Tyson said.
Consumer goods companies have increasingly faced resistance from budget-conscious shoppers, particularly lower-income households that have gravitated toward cheaper, private-label and value brands.
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