Pilgrim's Pride reports Q2 earnings, sales decline
July 28, 2016
by MEAT+POULTRY Staff
GREELEY, Colo. – Pilgrim’s Pride Corporation’s financial reports for this year’s second quarter showed revenue, net income and adjusted EBITDA down considerably from the year-ago quarter as consumers, wary about the economy and personal finances, switched to lower-priced products.
The company’s net sales for the 13 weeks ended June 26 were $2.03 billion, down 1.2 percent from the $2.05 billion reported for the second quarter of 2015.
The net income of $152.9 million, GAAP EPS of 60 cents went down 35.5 percent from last year’s EPS of 93 cents.
“During Q2, our results further improved sequentially compared to the last two quarters. While our portfolio strategy of a well-balanced exposure to different bird sizes was an important factor, the diversity of our product and broad customer mix, as well as geographic exposure were also important contributors,” Bill Lovette, CEO of Pilgrim’s, said in a statement. “We structured our portfolio to capture the strong commodity markets while lessening the impact of weaker markets to generate lower volatility and higher margins over the mid to long-term. We are generating the intended results and created a unique and meaningful advantage over competitors with less breadth in their portfolio.”
The company made operational improvements to its prepared foods division that impacted production in the short-term, but believes the upgrades will prepare its facilities for long-term growth. Prepared foods will launch new chicken sausage products made from antibiotic-free (ABF), vegetarian fed chickens to leverage its position in ABF, vegetarian, fresh chicken and carry it into the organic market.
“To demonstrate our commitment to growing our Prepared Foods operations and to further leverage our leadership in the ABF market as well as our recent announcement to enter into organic Fresh Chicken, we will launch new ABF veg-fed artisanal chicken sausages. These products will be fully cooked, minimally processed using all natural and no artificial ingredients or nitrites. Similar to our ABF veg-fed and organic Fresh Chicken programs, this represents our effort to better resonate with new consumer trends for more natural products while adding further value to our portfolio,” Lovette said, “While the announced investments in our Moorefield, West Virginia, plant and the operational improvements we are promoting in our other facilities pose an impact to volumes in the short run, they signify our commitment to Prepared Foods as an important source of future earnings growth while lessening the impact of volatile commodity markets in the long run."
Pilgrim’s reported operating income margins of 9.8 percent in the US and 20.5 percent in Mexico operations.
“Our operations in Mexico were a strong contributor to the Q2 results driven by an improved supply/demand environment, better operating performance, and increased synergies with the newly acquired assets. We are continuing to close and have meaningfully narrowed the gap in performance between our legacy and the newly acquired Northern Mexico operations. To further diversify our Mexico operations and grow our value-added segment, we are initiating a strategy to leverage our premium Pilgrim's name while continuing to pursue opportunities through the popular Del Dia brand,” Lovette added.