Tyson Foods's first-quarter profit nearly doubled and beyond expectations, thanks to rising prices, sending the largest US meatpacker's stock up 5% in premarket trade on Monday.
Raising meat pricing to offset rising labor and transportation expenses has benefited U.S. meatpackers at a time when restaurant demand is rebounding as they debut new menu items to reclaim clients lost during the pandemic.
Tyson said average beef prices increased roughly 32% in the quarter, offsetting a drop in volume due to supply chain bottlenecks. Tyson's operating margin increased to 11.3% from 6.7% a year before as a result of this.
However, as earnings at meatpackers continue to rise, the Biden administration is concerned about rising meat prices.
According to analysts, increased operating margins for Tyson and three other industry behemoths that butcher around 85% of grain-fattened cattle sliced into steaks for consumers will bring more unwanted scrutiny from Washington.
Overall beef sales increased by over 25% to $5 billion, enabling Tyson Foods, based in Springdale, Arkansas, to increase its revenues by 23.6% to $12.93 billion in the first quarter ended Jan. 1. According to Refinitiv's IBES statistics, analysts expected revenue of $12.18 billion on average.
Tyson earned $2.87 per share, exceeding projections of $1.95 per share, with net income attributable jumping to $1.12 billion.