Lower prices for meat are likely to pressure Tyson Foods Inc.'s sales in 2019, the company's CFO said Nov. 13.
The Springdale, Ark.-based meat processor expects sales of $41 billion for its 2019 fiscal year, down from its earlier expectation of $42 billion, Executive Vice President and CFO Stewart Glendinning told analysts during a call to discuss the company's fiscal fourth-quarter and full-year 2018 results on Nov. 13.
A trade dispute between the U.S. and China has led to a growing supply of pork within the U.S. — a surplus that has weighed on prices for processors like Tyson. While China is not a major market for Tyson, a buildup of meat in the U.S. as a result of tariffs has lowered prices.
Sales of the company's chicken products, meanwhile, increased during its 2018 fiscal year as prices remained about flat.
Both pork and chicken prices will weigh on sales going into 2019, Glendinning said. "The biggest impact is going to be meat pricing."
Earlier in the call, President, CEO and Director Noel White said the company "is well-positioned for the difficult pricing environment" heading into 2019.
Tyson is also keeping an eye out for deal opportunities as the company anticipates consumers eating more meat-heavy diets overseas.
About 90% of the global increase in protein consumption is forecast to come from outside of the U.S., Glendinning said. In August, the company agreed to purchase Keystone Foods LLC for $2.2 billion from Brazilian food company Marfrig Global Foods S.A..
"[W]e want to participate in that growth. We are going to need to sort of broaden our platform. That doesn't mean that we will do that any way that we can. It means that we'll bring a great deal of financial discipline to that expansion," Glendinning said. "Keystone is a powerful platform. ... [W]e certainly should expect to leverage that platform as we grow our international business."
