Net sales slip as Pilgrim's Pride reports Q4, year-end financial results

by MEAT+POULTRY Staff
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 Pilgrims
2016 ends with $714 million income and 9 percent operating margin.
 

GREELEY, Colo. – JBS USA-subsidiary Pilgrim’s Pride reported net sales of $1.91 billion for the quarter ended Dec. 25, 2016, down 2.7 percent from $1.96 billion reported in 2015.

Operating income in Q4 rose 15.3 percent from $107.8 million to $124.3 million and adjusted EBIDTA increased from $150 million to $172.2 million, an increase of 14.8 percent.

“Our Fresh business continued to perform well in Q4 driven by our differentiated portfolio strategy of having a well-balanced mix of multiple bird sizes, geographical coverage, and strong relationships with key customers,” said Bill Lovette, CEO of Pilgrim’s.  “Robust traffic at grocery retailers is driving strong demand for our products, a strong indication that chicken demand has remained healthy despite greater availability of other proteins. We remain committed to our prepared foods operations and expect growth in 2017, with new capacity additions at Moorefield to begin contributing to volumes starting in Q1.”

For the year, net sales were down 3 percent from $8.18 billion in 2015 to $7.93 billion in 2016. Operating income dropped significantly from $1.04 billion in 2015 to $713.5 million in 2016, a decrease of 31.7 percent. Adjusted EBIDTA also decreased 25.9 percent from 1.12 billion in 2015 to $899.3 million in 2016.

Pilgrim’s Pride invested heavily within the company during 2016 with a commitment to generate shareholder value, according to Lovette. Highlights include $270 million in capital expenditure on operations, $200 million shares repurchased and $2.2 billion in special dividends; launch of premium, Pilgrim’s-branded value added products in Mexico and the $350 million acquisition of St. Cloud, Minnesota-based GNP Company from the Maschhoffs LLC.

According to a previous statement, Pilgrim’s expects to realize $20 million in annual operating  synergies in production and distribution and it plans on capturing an estimated present value of approximately $28 million in tax savings and a post synergies EBITDA multiple of 3.9.

“We continue to invest in facility improvements and diversify our portfolio by improving mix and offer more differentiated, innovative products to serve key customer requirements, reduce the impact of commodity markets, and further raise our margin profile,” Lovette said. “Reflecting our commitment to spend cash flows on strong ROI projects, we spent a total of $270 million on capex in 2016, higher than our depreciation and a record for our company; including strategic projects which will strengthen our operational efficiencies and tailored customer needs to improve competitive advantages for us.”

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