Bird flu lingering issue for Pilgrim's
Oct. 29, 2015
by Erica Shaffer
Export market restrictions and other factors hurt Pilgrim's Pride Corp. Q3 results.
GREELEY, Colo. – Restrictions on exports of US poultry weighed heavily on third quarter earnings for Pilgrim’s Pride Corp. The company reported net sales of $2.11 billion, a 6 percent decline from $2.27 billion in the year ago period.
China, the European Union and countries in the Middle East and Central America set restrictions on US poultry-meat imports during an outbreak of highly pathogenic avian influenza that destroyed more than 48 million birds. Pilgrim’s Pride, a unit of Sao Paulo, Brazil-based JBS SA, operates poultry processing facilities in 12 states, Puerto Rico and Mexico.
“The continued challenges in the export markets, the strong dollar and the lowest chicken cutout in the past five years during Q3 have had an impact on the commodity segments of our business, and on our US export and Mexico sales,” Bill Lovette, CEO, said in a news release. “Additionally, non-routine costs at two of our facilities further weighed on our results. Despite these challenges, our team has managed to produce solid margins compared to periods when prices were at similar levels.”
Overall, Pilgrim’s reported net income of $137.1 million compared to 256.0 million in the third quarter of 2014. Adjusted earnings per share were 58 cents compared to $1.01 in the year-ago quarter. EBITDA for the quarter was $274.3 million, or a 13 percent margin.
In the past four years, Pilgrim’s has implemented a strategy of product line diversification. Lovette noted the company’s diversification strategy remains key to maintaining strong financial performance and minimizing the impact of challenging market conditions.
“Although we expect export markets to gradually reopen soon depending on the domestic AI situation, we choose not to stand still and be complacent. Instead, we continue to seek alternative and creative ways to reduce our dependencies on commodity products to produce more consistent margins by sharpening our focus on high growth markets,” Lovette said. “We also remain on track to extract $200 million in operational improvements for the year.”