Pilgrim's Pride Reports First Quarter Loss

US - US poultry producer and processor Pilgrim's Pride Corporation has reported a net loss of $32.3 million on net sales of $2.09 billion for the first fiscal quarter ended December 29, 2007, compared to a net loss of $42.9 million on sales of $1.86 billion in the same period last year.
calendar icon 30 January 2008
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The pro forma amounts assume the acquisition of Gold Kist Inc., which closed on 27 December 2006, was completed on September 30, 2006, and included in the operating results for the quarter.

The results for the first quarter of the 2008 financial year include a non-recurring income tax charge of approximately $13.0 million, related to an adjustment in deferred taxes as a result of a newly enacted tax law in Mexico.

For the first quarter of 2007, the company reported a net loss of $8.7 million, on total sales of $1.34 billion.

"Our results in the first quarter of fiscal 2008 reflect the significant challenge posed by higher feed-ingredient costs, which have climbed sharply over the past few months and currently show no signs of abating in 2008," said Ken Pilgrim, chairman and interim president of Pilgrim's Pride.

"Our feed-ingredient costs for the quarter, on a pro forma basis, rose 24 per cent, or $157 million, when compared to the same period a year ago. Those cost increases -- when coupled with labor shortages, higher production, freight and fuel costs during the quarter -- offset most of the improvements in market pricing and product mix."

He said the company's consumer retail business continued to post good growth as a result of increased penetration of supermarket meat and deli cases and new business from a number of large customers. In addition, export demand remained solid and the company was able to reduce its commodity pounds by upgrading product into higher-margin, value-added chicken items.

Looking ahead, Mr. Pilgrim said that based on the current commodity futures markets, the company's total feed-ingredient costs for fiscal 2008 would be up more than $700 million from last fiscal year. Mr. Pilgrim said he believes that surging feed costs make it unlikely that the US chicken industry in 2008 will grow at the 3 per cent rate projected by the US Department of Agriculture last fall.

"Given the unprecedented run-up in feed-ingredient costs, we believe the industry will have to take a much closer look at production levels for 2008 and that overall production is not likely to grow at the rate previously projected by the USDA. We will continue to closely monitor industry fundamentals and take whatever actions we feel are necessary to better balance our supply and demand and to position our company for sustained, profitable growth," said Mr. Pilgrim.

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