As Food Prices Soar, Tyson Reports Huge Profits
Going to the grocery store has become a painful experience for most consumers. But for food companies, soaring food prices can mean exorbitant profits.
Tyson Foods, the biggest U.S. meat packer by sales, says its quarterly profit beat expectations, prompting the company to raise its outlook for the year.
But Tyson doesn’t want anyone muttering “price gouging” while looking for bargains in the supermarket’s meat aisle.
The Arkansas-based company insists its higher prices are just a reflection of higher production costs.
“We’re not asking the customer to pay for our inefficiencies,” Tyson chief executive Donnie King told reporters. “We’re asking customers to pay for the inflation we’re seeing throughout the supply chain.”
Because of this, according to the company, its average beef price has risen 24% over the past three months. Chicken prices rose 14%, while pork prices were 11% higher.
Here’s the thing, though: If Tyson’s higher prices only offset higher manufacturing costs, its profit margin shouldn’t increase significantly. It should be a wash, more or less.
But the company’s quarterly profit jumped to $829 million from $476 million a year earlier. That’s almost twice the profit.
Meatpackers have come under scrutiny from the White House and Congress due to high prices. But it is very difficult to prove the price gouging.
All we know for certain is that Tyson, for his part, is doing very well and expects that to remain the case throughout 2022.
And on a day when the Dow fell 654 points and most stocks were braised, Tyson shares rose 2%.
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