Pilgrim's Pride Q3 earnings, revenue decline
Oct. 27, 2016
by Erica Shaffer
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The company cited unfavorable grain costs as one factor to impact quarterly result.
GREELEY, Colo. – Pilgrim’s Pride Corp., a unit of JBS SA, reported lower net income and net sales for the third quarter ended Sept. 25.
Net income for the quarter was $98.7 million, or 39 cents per diluted share, compared with $137.1 million, or 53 cents per diluted share reported in the third quarter of 2015. Operating income for the quarter was $163.8 million, compared with $231.1 million in the year-ago quarter.
Third-quarter net sales were $2.03 billion, down from $2.11 billion reported in the comparable year-ago period.
“Market prices for feed ingredients remain volatile,” the company said in its earnings statement. “Consequently, there can be no assurance that our feed ingredients prices will not increase materially and that such increases would not negatively impact our financial position, results of operations and cash flow.”
However, market prices for the company’s chicken products currently are at levels sufficient to offset the costs of feed ingredients.
“During Q3, our Fresh business continued to perform well driven by our differentiated portfolio strategy of having presence in all three bird sizes and strong relationships with key customers,” CEO Bill Lovette said in a statement. “Retail demand for our birds remained robust despite concerns about greater availability of other competing proteins. Within exports, volumes are also improving from a year ago, which improves value for the back half of the bird, and supportive of the overall cutout.”
Looking ahead to 2017, the company is on track with converting one poultry processing facility to USDA-certified organic production in the first quarter of 2017. Additionally, Pilgrim’s expects to complete the ramp-up of the largest prepared foods facility to full capacity by the end of the first quarter next year.
“The conversion of our existing facility to certified USDA organic chicken production is proceeding well and we plan to have the first chicken to market in Q1 of 2017,” Lovette said. “Additionally, we are starting work on converting one of our case-ready plants to produce ABF, veg-fed chicken. Together with our prior announcements on organic and ABF Fresh chicken as well as further processed products, we believe the latest conversion reinforces our strategy to better resonate with new consumer trends for more natural products while adding further value to our portfolio and supporting the growth of key customers. Furthermore, these investments signify our commitment to look for new sources of potential earnings driver while lessening the impact of volatile commodity markets in the long run.”