Tom Polansek

CHICAGO (Reuters). Tyson Foods Inc (NYSE:) will report solid results for its beef businesses in Monday’s quarterly earnings report. The Biden administration continues to criticize high meat prices as well as fat profits for processors.

An analyst said Tyson’s increased operating margins may attract even more attention from Washington. Tyson is one of three major industry players that kill about 85% grain-fattened cattle and then make steaks for customers.

In response to rising meat prices, the Biden administration stated that they plan to invest $1 billion in new regulations and implement “meaningful competition” to reduce them.

Arun Sundaram (senior equity research analyst, CFRA Research), estimates that Tyson’s beef division margins reached 16% from October through December 2021, the first quarter of Tyson’s financial year. The higher meat prices accounted for this increase. The unit had reported quarterly sales of almost $4 billion in the previous year, and margins were 13.2% last year.

According to Refinitiv Eikon, analysts expect Tyson’s quarterly revenues from its beef units to reach $12.177 billion. This is an increase of 16% over a year ago.

Sundaram explained that the company finds itself in a dilemma between increasing profits for shareholders, and taking on more government scrutiny.

He stated, “I think that they’re stuck in a hard spot.”

Tyson claimed that meat prices increased because of market factors, including severe weather events and the pandemic. The company also raised prices in an effort to fight inflation.

Tyson stated that in the October 2nd quarter, average beef prices increased 32.7% while the unit’s operating margins reached 22.9%.

Stephens Inc managing Director of Food and Agribusiness Ben Bienvenu said that Tyson’s Beef Margins was 15% for the last quarter, despite strong demand.

Bienvenu explained that there has been an increase in consumers’ willingness to accept higher prices.

Meatpacker JBS SA (OTC:) ()U.S. beef processors were accused of conspiring against each other to restrict supply and inflate profits. U.S. Senators are reiterating their calls for transparency in the beef industry with this settlement.