GREELEY, Colo. – Pilgrim’s Pride Corp., a subsidiary of São Paulo, Brazil-based JBS SA reported net sales for the first quarter were $2.72 billion, down 0.8 percent compared with $2.75 billion reported in the year-ago quarter.
For the first quarter ended March 31, 2019, net income attributable to Pilgrim’s Pride was $84.1 million, or $0.34 per diluted share, compared with $119.4 million, or $0.48 per diluted share, reported in the first quarter of 2018.
The company reported an operating income of $137 million, or $0.34 per diluted share, for the first quarter, compared with $201.6 million reported in the first quarter of 2018.
“After a very challenging market in 2018, we experienced a much better environment within our US operations during Q1 particularly in commodity large bird deboning, with demand from retailers and QSR operators rebounding as they recognized the value of chicken,” said Jayson Penn, CEO of Pilgrim’s Pride. “Feature activities normalized to seasonal levels throughout the quarter and the momentum has been sustained into early Q2. Commodity boneless prices have already surpassed levels from a year ago and are close to the five-year average, while wing prices are near historical highs. We have been heavily investing in further differentiating our portfolio to increase our capacities and capabilities to meet customer expectations. The investments in the operations and the focus of our people have yielded an increase in performance, and further growth prospects remain available.”
Pilgrim’s adjusted operating income margins were 6.1 percent in the US, 2.9 percent in Mexico and 2.5 percent in its European operations.
The company also said that weaker seasonal markets in Mexico impacted results, but conditions should improve in the second quarter.
Penn continued: “Chicken demand was also affected by more availability of imported pork from the US during the quarter, but we believe chicken demand can continue to grow in-line with historical rates longer term. The environment has already started to recover in Q2, and prices have begun to react positively, with growing conditions reverting back to normal, demand improving, and competition from pork imports declining. Our Prepared Foods have continued to grow at a double-digit rate and are generating great results under both premium Pilgrim’s and Del Dia brands to drive the evolution of our Mexican portfolio towards more differentiated, higher-value products giving us a clear path to margin expansion.”
The company noted that Europe continued to see a substantial increase in input costs, especially ingredients, higher utilities, labor and packaging.
“These increases were partially offset by cost reduction initiatives, synergies and price adjustments, some of which have taken slightly longer than expected to be passed on and reflected in customer contracts,” Penn said. “Despite the impact in results, we expect an improvement month over month as we adjust our prices based on key customer contracts and expect the full recovery within our pricing models.”