Tyson Foods, the largest U.S. meat processor, reported a weaker-than-expected quarterly profit as shoppers and restaurants switched to cheaper chicken from beef, and the company cut its full-year sales forecast.
Tyson shares fell sharply Monday. (For the latest stock price, click here.)
Chicken volume rose just 0.1 percent in the second quarter that ended March 30, but beef volume fell 3.9 percent, pork 2.2 percent and packaged foods 0.8 percent.
The company's gross margin fell to 4.85 percent, from 6.47 percent a year earlier.
"Our beef segment suffered margin compression as consumers opted for the relative value of chicken," Chief Executive Donnie Smith said in a statement on Monday.
Tyson and its competitors are still feeling the effects of last year's Midwest drought, the worst in 50 years, which pushed up feed costs and reduced cattle supplies.
Tyson forecast sales of $34.5 billion for fiscal 2013, down from its previous forecast of $35 billion. Analysts expected $34.49 billion, according to Thomson Reuters.
Tyson's net income fell 43 percent to $95 million, or 26 cents per share, from $166 million, or 44 cents per share, a year earlier. On an adjusted basis, the company earned 36 cents per share. Sales rose by just under 2 percent to $8.42 billion.
Analysts on average had expected earnings of 45 cents per share, on revenue of $8.58 billion, according to Thomson Reuters.
Agribusiness company Cargill, another big beef producer, said last month that its quarterly earnings fell 42 percent as the lingering effects of the drought hit its meat and grain operations.