Aug 3 (Reuters) - Tyson Foods cut its annual profit forecast on Monday, warning that losses in its beef business would widen as tight cattle supplies keep livestock costs elevated.
U.S. ranchers have slashed herd sizes after years of drought burned up pastures and raised feed costs, shrinking cattle inventories to their lowest level in 75 years, driving up beef prices, and squeezing meatpackers' profit margins.
Higher prices have also weighed on demand as inflation-conscious consumers curb spending.
Tyson now expects fiscal 2026 adjusted operating income of $2.1 billion to $2.3 billion, compared with its previous forecast of $2.2 billion to $2.4 billion.
It expects annual revenue growth of 2.5% to 3.5%, compared with analysts' expectations of a growth of 4.3%, according to data compiled by LSEG. The company had previously forecast growth of 2% to 4%.
For its beef business, the company forecast an adjusted operating loss of $500 million to $650 million, compared with its prior expectation of a loss of $350 million to $500 million.
Beef volumes fell 15.9% in the third quarter ended June 27.
CFO Curt Calaway said in May that efforts by cattle producers to rebuild the nation's diminished herd had been "spotty" and that supplies will remain tight.
Supplies were further constrained after the U.S. Department of Agriculture suspended imports of livestock from Mexico over concerns about the spread of the flesh-eating New World screwworm. The agency plans to start lifting its ban this month, a move that could provide some relief to beef processors.
As beef prices rise, some consumers have turned to chicken as a cheaper source of protein, helping Tyson offset part of the weakness in its larger beef segment.
Chicken sales volumes rose 1% during the quarter, while adjusted operating margin in the segment increased 11.2%.
Tyson reported quarterly sales of $13.87 billion, below analysts' estimates of $14.12 billion.
(Reporting by Tom Polansek and Neil J Kanatt in Bengaluru; Editing by Vijay Kishore)
