(Reuters) -U.S. meatpacker Tyson Foods Inc (NYSE:) on Monday forecast full-year sales above Wall Street estimates, signaling steady demand for its higher-priced chicken and beef despite decades-high levels of inflation.
Packaged food makers have so far witnessed very little pushback from consumers on price increases, which were undertaken due to rising costs.
The Springdale, Arkansas-based company projected full-year 2023 sales between $55 billion and $57 billion, compared with analysts’ expectation of $53.60 billion, according to IBES data from Refinitiv.
Analysts, however, have raised concerns that surging inflation and rising interest rates could impact demand for premium steaks as consumers look for more affordable options.
Demand for premium cuts of beef declined in the fourth quarter compared to a year earlier, Tyson said.
Sales volume at the company’s chicken business, the largest after beef, increased 1.1% in the quarter, even as Tyson raised prices by an average 18.2%.
Shares of the maker of Ball (NYSE:) Park hotdogs and Jimmy Dean sausages rose about 1% in premarket trading after the company reported its sales rose about 7% to $13.74 billion, topping analysts’ average estimate of $13.50 billion.
The company, however, missed estimates for adjusted profit as its margins remained pressured due to surging costs of animal feed and spiking commodity prices — driven by lingering industry-wide supply chain challenges and the Ukraine war.
Tyson posted an operating margin of 5.6% in the reported quarter, compared with 14.9% a year earlier.
Excluding items, Tyson earned $1.63 per share, missing estimates of $1.73 per share.