With Recent Price Increase, Tyson Foods Successfully Passes Inflation Costs On To Consumers

Tyson Foods — the second-largest meat and poultry producer in the United States — is seeing improved margins by passing inflation costs on to consumers.

The Daily Wire reported in August that the company raised prices on beef, chicken, and pork to deal with “accelerating and unprecedented inflation” threatening all of its business units. 

Tyson’s strategy has resulted in higher revenues. Following the company’s most recent earnings call, The Wall Street Journal summarized:

Rising prices helped lift Tyson’s revenue by 12% to $12.8 billion in the company’s fiscal fourth quarter, while earnings increased to $1.36 billion, more than doubling from the same quarter last year. The results topped analysts’ expectations. Tyson shares increased 2.7% in midday trading Monday.

Tyson’s profit margins also improved, the company said. Operating margins in Tyson’s beef business jumped to 22.9% in the most recent quarter, compared with 9.7% in the same quarter in 2019. Its pork business improved over that period to 4.7% and its prepared-foods operating margins increased to 36.5%, from 4.8% in 2019.

“I can’t think of a single thing that has either stayed the same or gone down,” said Tyson chief executive Donnie King, in reference to rising input costs.

“The inflation we incur needs to be passed on,” added chief financial officer Stewart Glendinning. “Some of the inflation for us has been substantial.”

The company has also been combating labor shortages that have been presenting challenges to businesses across the United States, according to the Journal:

Increasing wages and adding new benefits, like Tyson’s recent introduction of a sick leave policy for plant workers, have helped improve staffing, executives said. The efforts also are adding costs at the same time that poor weather has driven up the price of grain, typically the main expense in raising livestock and poultry…

Mr. King said Tyson’s staffing levels have improved. Its poultry plants are now fully staffed, the first time that has been the case for Tyson in two years, he said. Tyson in August announced a Covid-19 vaccine mandate for its approximately 120,000 U.S. workers, which he said led to about 96% of the company’s employees being vaccinated as of this month.

Other companies likewise announced price hikes as a mitigant for higher inflation — which is now at a 6.2% rate for consumers.

Goya Foods CEO Bob Unanue told Fox Business that “inflation is here to stay at least for a good while and everybody has these costs.” He noted that the increased