For the 14-week quarter, the US-based poultry-processing subsidiary of São Paulo, Brazil-based JBS SA, reported net income of $134.34 million ($0.54 per share) compared to $70.62 million ($0.28 per share) the previous year on net sales of $2.74 billion versus $2.37 billion in the same (13-week) quarter of fiscal 2016, representing a 15.7 percent increase year-over-year.
For the 53-week fiscal year ended Dec. 31, 2017, Pilgrim’s reported sales of $10.77 billion, a 9 percent increase over the previous 52-week fiscal year, ended Dec. 25, 2016. Earnings per share for the year increased more than 61 percent, to $2.79 in 2017 compared to $1.73 the previous year.
Pilgrim’s adjusted operating income margins were 7.3 percent in the US, 4 percent in Mexico and 5 percent in its European operations. Adjustments reflect the Moy Park acquisition weather events and variations in exchange rates.
“We generated strong, well-balanced consolidated performance in 2017,” said CEO Bill Lovette. “Our US and Mexico operations were solid despite logistical challenges in Q4 due to the after-effects from natural events in Puerto Rico, Mexico and the US, while our newly acquired UK and continental Europe operations were consistent.”
Lovette added that the $141 million invested to renovate its US facilities during the year resulted in a successful conversion of what was a large-bird processing plant, which was part of Pilgrim’s GNP acquisition, to operations producing organic and antibiotic-free products.
“We completed the announced strategic capital investment improvements, including Sanford, North Carolina, and Moorefield, West Virginia, which will diversify our portfolio by improving mix, reduce the impact of commodity markets and further raise our margin profile. The Sanford conversion from commodity to organic tray-pack and the acquisition of GNP bring us leadership in premium-branded and NAE chickens while fulfilling our strategy of creating a portfolio of differentiated products to key customers.”
He added that the company felt the impact of the annual anomalies of inherent in the commodity side of the business that has already begun to rebound.
“While small-bird and tray-pack have remained strong during Q4, conditions in the commodity markets declined in-line with seasonality but are already recovering well in the new year, indicating the continuation of chicken demand as the protein of choice in domestic and international markets,” Lovette said.
The company has dealt well with the adversity of closing some facilities and interruptions in other operations in the wake of a flurry of hurricanes during Q4, he said.
“Facing significant challenges, we are very proud of our team members who had worked tirelessly to continue the operations of our facilities while assisting with rebuilding the local communities.”
The company is continuing to integrate the operations acquired in the purchase of GNP, which was finalized in early 2017, according to Lovette.
“Margins have substantially increased since the acquisition just over a year ago and have reached parity with our legacy business during Q4. The integration is going well, and we have extracted significant operating and product synergies, and are also preparing to expand the distribution of our premium Just Bare brand,” he said. “Combined with the success in improving the profitability of our acquired Mexican operations, we believe we have the methodology and the experienced personnel required to grow the operating and financial performance of our UK and continental Europe business.”