Pilgrim's on a positive roll in Q2

by Joel Crews
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Capital expenditures will focus on the company's prepared foods business.
Acquisitions and the completion of capital projects resulted in positive earnings results in Pilgrim’s second quarter.
 
GREELEY, Colo. – Pilgrim’s Pride Corp., a subsidiary of São Paulo, Brazil-based JBS SA reported increased net sales of 11 percent the second quarter ended June 25, 2017 compared to the same period the previous year. The gain follows Q1 sales that increased 2.9 percent over the second quarter of 2016.

Reporting net sales of $2,251,600,000 compared with $2,028,300,000, last year the company’s $233.6 million, or $0.94 per diluted share marked a 56.7 percent increase over the $0.60 EPS during the same period last year. Domestic operating income margins approached 14 percent with operations in Mexico topped 22 percent.

In its announcement of the results, Pilgrim’s stated the positive results reflected completion of capital projects that fulfill its ability to meet market demand for products and minimize volatility. It also stated the acquisition of GNP earlier this year and the integration of the assets from the 2015 acquisition of Tyson de Mexico contributed positively to the quarter’s performance.

Bill Lovette, Pilgrim's Pride
Bill Lovette, CEO, Pilgrim’s Pride Corp.

"Our Q2 results materially improved from last quarter as well as from a year ago driven by much stronger results at our US operations while Mexico continued to perform very well,” said Bill Lovette, CEO.

The company’s ability to exercise flexibility in a market where bird size volatility can create operational challenges proved advantageous too, Lovette said.

“While small bird and tray-pack remained robust during the period, our team captured the strength in the large bird deboning environment, which significantly rebounded after a slower than expected start earlier in the year, driven by stronger exports and very good domestic demand as the grilling season kicked off,” he said.

GNP
The Gold'n Plump and Just BARE brands represent an opportunity for Pilgrim’s Pride to expand into new segments, Lovette said.
 

Strong demand for chicken exports and positive demand domestically for chicken products during grilling season have been integral in the success so far in 2017 and the company is looking to growing its business segments that specialize in production claims, including organic, natural and antibiotic-free lines.

"We continue to search for solutions in delivering more differentiated customized products that are innovative to satisfy our key customers' needs. We currently have market leading positions in USDA-certified organic and NAE, two segments that resonate very well with new consumer trends for more natural products while adding more value to our portfolio,” Lovette said. “We also have the potential to expand into new segments with our broad channel approach using the Gold'n Plump brand as well as the new premium Just BARE chicken in the "better for you" category."

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