Pilgrim's Pride sees chicken demand increasing in 2015

by Keith Nunes
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GREELEY, Colo. — Poultry processor Pilgrim’s Pride continued to benefit from the chicken market’s strong position compared with tight supplies of beef and pork during the third quarter of fiscal 2014, ended Sept. 28. Management thinks the momentum will continue as the company heads into fiscal 2015.

“Our portfolio model yields a diversified sales mix ensuring we can adapt quickly to changes in market supply and mitigate market volatility,” said Bill Lovette, president and CEO, during a conference call with financial analysts on Oct. 30. “While high spot prices for parts such as boneless skinless breasts and wings benefit our large bird business, some of our other businesses, such as prepared foods, benefit when those prices decline. We have given much critical thought in constructing our broad segment and product portfolio to yield a more consistent earnings stream as chicken supply and demand ebb and flow over long periods of time.”

For the first nine months of fiscal 2014, Pilgrim’s Pride’s net income equaled $544,461,000, or $2.10 per share, and a sharp increase compared with the previous year when net income was $406,204,000, or $1.57 per share.

Sales for the period were $6,472,929,000, up from $6,363,863,000 the previous year.

Lovette said he sees increased demand for chicken next year.

“We have seen both food service and retail operators wanting more chicken across the whole spectrum of products we supply, both on the large bird for deboning segment, and especially on the small bird segment that goes either into the QSR fried chicken restaurant industry or the supermarket deli,” he said. “Supplies remain very tight. We don’t see that changing in 2015, even though there could be up to a 3 percent increase, and we think that is back half loaded.

“We believe beef production in addition to being down about 5 percent this year over last, we think that due to heifer retention and other herd related issues, we think the beef supplies will go down again 2 percent in 2015 over 2014, and although there may be some increase in pork production, if you think about a strengthening consumer environment in the US, and strong demand for exports of pork, we believe that prices of both beef and pork in 2015 will continue to give chicken a favorable value proposition.”

Value will remain a strong point of differentiation for chicken consumption, Lovette said.

“We continue to see the spread between retail beef price and retail chicken price widen,” he said. “And we don’t see that changing in the foreseeable future. From a pork standpoint, while we may realize more production next year, we think demand for pork will remain strong, both domestically and especially on an export basis. So it looks to be out in front of us a continued good environment for increasing chicken demand.”
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