Pilgrim's Pride reports better-than-expected Q1

by Erica Shaffer
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GREELEY, Colo. – Pilgrim’s Pride Corp., a unit of Sao Paulo, Brazil-based JBS SA, reported a steep drop in net income for the first quarter, but strength in some areas of its business offset weak performances by other segments.

For the first quarter ended March 27, Pilgrim’s reported net income of $118.37 million, or 46 cents per diluted share, compared with $204.22 million, or 79 cents per diluted share in the year-ago period.

“Our US and Mexican businesses improved sequentially in Q1 following a challenging Q4, putting us in a strong position for Q2,” CEO Bill Lovette said in a statement. “While market conditions contributed to the improvement, our well-balanced portfolio played a key factor in delivering the improved Q1 performance since we were able to leverage the strength in specific market segments while minimizing the impact of the others.”

Net sales for quarter totaled $1.96 billion compared with $2.05 billion in the first quarter of 2015.

Adjusted EBITDA was 11.9 percent margin or $233.5 million. EBIT margin for the US business was 10.5 percent, while the Mexico business reported 4.8 percent EBIT, the company said.

Despite the decline in profit, Pilgrim’s announced a $2.75 per share special dividend, which will be made on May 18 to shareholders of record as of May 10.

The company also announced plans to convert one Pilgrim’s production facility to produce certified organic chicken.

“Leveraging our leadership in the ABF [antibiotic free] market and our partnership with key customers, we are excited to announce that we have begun work on converting one of our facilities to produce USDA-certified organic chicken,” Lovette said. “We are committed to deploy valuable resources, when necessary, to accelerate our growth by offering creative solutions to fulfill emerging consumer demand preference trends for more natural products such as ABF and organic chicken.

“We continue to believe our portfolio strategy, combined with our approach of being a valued partner with key customers and pursuing operational excellence while strategically growing value-added exports, will allow us to deliver less volatility and higher earnings to our shareholders over time.”

Company executives are expected to give more details about Pilgrim’s financial performance and the company’s plans for organic poultry production during a call with analysts on May 28.

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