Tyson Foods Inc. on July 30 lowered its adjusted EPS guidance for fiscal 2018 to a range of $5.70 to $6, from its previous projection of $6.55 to $6.70, due to the expected impact of increased tariffs, primarily on chicken and pork prices.
"The combination of changing global trade policies here and abroad, and the uncertainty of any resolution, have created a challenging market environment of increased volatility, lower prices and oversupply of protein," President and CEO Tom Hayes said.
The company said increased tariffs and the uncertain trade environment are negatively affecting both domestic and export prices for chicken and pork.
U.S. chicken nugget and pork exports are caught up in a tit-for-tat trade dispute between the U.S. and China. China imposed retaliatory tariffs on those U.S. exports after President Donald Trump imposed tariffs on $34 billion in imports from China.
The earnings adjustment was also driven by sluggish demand for domestic chicken, a compressed pork margin and the increased volatility in the commodity markets.
Hayes added: "We still face pressure on chicken sales volume and pricing due to the abundance of relatively low-priced beef and pork on the market. We are working to mitigate these pressures, but our fourth quarter is off to a slower than expected start driven primarily by market-related factors. We expect the supply-demand imbalance to equilibrate, and we remain confident in our ability to grow our company and create long-term shareholder value."