Pilgrim's Pride Sees Light at End of Tunnel

US - Pilgrim's Pride has reported its financial results for first quarter of fiscal year 2010. It announced a net loss of $45.5 million, a figure that includes one-off costs of reorganisation. One of its idled plants is to be re-opened in this year, and two more by spring 2012.
calendar icon 7 May 2010
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Pilgrim's Pride Corporation has reported a net loss of $45.5 million, or $0.21 per diluted share, on net sales of $1.6 billion for the first quarter ended 28 March 2010. These results include non-recurring administrative restructuring charges and reorganisation expenses of $56.5 million pre-tax, or $32.7 million after tax, or $0.16 per diluted share. For the comparable quarter a year earlier, the company reported a net loss of $58.8 million, or $0.79 per share, on total sales of nearly $1.7 billion. Adjusted EBITDA, which excludes restructuring and reorganization charges, was a positive $59.5 million for the first quarter of fiscal 2010.

Don Jackson, Pilgrim's Pride president and chief executive, commented: "While I am encouraged by the progress we have made in several areas of our business, our overall performance in the first quarter of fiscal 2010 was below our expectations."

The company said several factors contributed to the loss for the quarter, including: restructuring and reorganisation costs; a delay in the addition of new further-processed volume which forced the company to sell commodity meat at lower prices; a loss of approximately $11 million related to grain hedges, of which $6 million was mark-to-market on open positions; and lower-than-anticipated market prices for dark meat. Mr Jackson said the further-processed volume should be on board before the end of June.

He explained: "Our single largest opportunity to create value is through improved product mix both in retail and food-service. At the same time, we must continue to focus on operating more efficiently. We are making good progress in all of these areas, and I am confident that our financial results in the second quarter will show significant improvement. Based on preliminary results, we were profitable for the month of April."

Mr Jackson said he is optimistic about industry fundamentals heading into the summer.

He continued: "Although production is slightly higher than a year ago, supplies remain fairly tight. Feed costs appear to have stabilised and there are growing signs that the economy is improving. With many retailers and food-service operators planning to feature chicken in the months ahead, demand is strengthening."

Consistent with its strategy of matching production to forecasted demand, Pilgrim's Pride announced plans to re-open its chicken processing plant in Douglas, Georgia, by January 2011. The company also plans to re-open two other idled facilities, one by mid-2011 and the other by spring 2012. The re-opening of these three plants will result in a production increase of 10 per cent, or approximately 3.5 million birds per week.

Mr Jackson added: "Pilgrim's Pride and the industry have taken out significant production capacity over the past two years. We fully believe that with the strengthening economy and improving fundamentals, consumer demand for chicken is increasing. By re-opening these facilities, Pilgrim's Pride will be uniquely positioned to fulfill our customers' needs."

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