Tyson Foods shares fell sharply on Monday after the company reported a 15% drop in quarterly profit due to business disruptions caused by the coronavirus pandemic.

For the second quarter, Tyson posted net income of $364 million, or $1 per share, compared to $426 million, or $1.17 per share a year earlier. Excluding items, the meat producer earned 77 cents per share.

Net sales rose 4.3% to $10.89 billion. Analysts had expected adjusted earnings per share of $1.04 on revenue of $10.96 billion.

“During the quarter, we witnessed an unprecedented shift in demand from foodservice to retail, temporary plant closures, reduced team member attendance, and supply chain volatility as a result of the virus,” CEO Noel White said in a news release.

In trading Monday, Tyson shares dropped 9.6% to $54.33, bringing the stock’s losses for the year so far to more than 34%.

As CNBC reports, “The coronavirus pandemic has hit Tyson’s business hard, forcing the company to slow down production or close plants temporarily as hundreds of its workers test positive for COVID-19.”

With other meat producers experiencing similar problems, President Trump invoked the Defense Production Act to require plants to stay open.

Tyson said it expects the pandemic-related disruptions will “increase our operating costs and negatively impact our volumes for the remainder of fiscal 2020,” with lower levels of productivity and higher costs of production likely to continue in the short term until the effects of COVID-19 diminish.

The company also noted that each of its segments experienced a shift in demand in the second quarter from foodservice to retail as restaurants closed and consumers stockpiled groceries. However, “volume increases in retail have not been sufficient to offset the losses in foodservice and as a result, we expect decreases in volumes in the second half of fiscal 2020.”

Tyson’s grocery store sales have risen about 30% to 40%, while foodservice sales have fallen 25% to 30%.

“Our solid balance sheet, ample liquidity, scale, and diversity continue to give us confidence in our long-term outlook,” White said.

Drew Angerer/Getty Images

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