Tyson Foods, Inc.’s first-quarter profit nearly doubled and surged past estimates, boosted by higher prices, sending the largest US meatpacker’s shares up 5% in pre-market trading on Monday.
At a time when demand from restaurants is rebounding, as they launch new menu items to bring back customers lost during the pandemic, raising meat prices to combat higher labour and transportation costs has greatly benefitted US meatpackers.
In the quarter, Tyson noted that average beef prices were up nearly 32%, offsetting a decline in volume caused by supply chain constraints.
This helped Tyson’s operating margin grow to 11.3%, up from 6.7% a year earlier.
Biden Administration ‘Concerned’
The higher meat prices have, however, had the Biden administration concerned, as profits continue to mount at meatpackers.
Analysts have said that increased operating margins could attract more unwanted scrutiny from Washington for Tyson and three other industry behemoths that slaughter about 85% of grain-fattened cattle carved into steaks for consumers.
Beef Sales Increase
Overall sales for beef rose about 25%, to $5 billion, helping Springdale, Arkansas-based Tyson’s sales rise by 23.6%, to $12.93 billion, in the first quarter ended 1 January.
Analysts, on average, were expecting revenue of $12.18 billion, according to IBES data from Refinitiv.
Net income attributable jumped to $1.12 billion, and excluding items, Tyson earned $2.87 per share, also beating estimates of $1.95 per share.