GREELEY, COLO. – While still reeling from the past year’s COVID-19 pandemic and related labor shortages, Pilgrim’s Pride Corp. also faced headwinds due to weather-related events and rising input costs, which posed challenges to its operations and were reflected in its 2021 fiscal first-quarter results for the period ended March 28, 2021. The company’s adjusted net income was $103 million or 42¢ per share on the common stock compared to the same period in 2020 when net income was $67.3 million or 18¢ per share, which included a one-time 9¢ per-share gain on a case settlement received by the company. Net sales topped $3.27 billion, up 6.5% from $3.07 billion last year. Operating income increased to 158.5 billion, 88% higher than the previous year’s $165.5 billion. The company, which is majority owned by JBS SA, reported operating income margins of 3.4% in the United States, 1.2% in Europe and 19% in Mexico.
The company reported that US demand is on a recovery trend as the foodservice segment improves and retail and quick-service segments hold steady in the face of rising input and operating costs and disruptions due to extreme winter weather conditions. Notably, the company said its large bird deboning reported a spike in pricing for the quarter compared to a year ago as Mexico’s demand from the end of 2020 continued into 2021. Operational improvements in Pilgrim’s European businesses resulted in operational efficiencies, serving to offset higher feed costs but not enough to compensate for pricing related to last year’s dramatic drop in foodservice demand and unplanned costs to mitigate the impact of COVID-19 for the past year. Export constraints to China also served to create hurdles as the company saw two of its licenses suspended due to concerns over COVID-19. Pilgrim’s was also challenged by live hog pricing in the European Union and United Kingdom markets.
In Mexico, a balancing supply-demand ratio resulted in a rebound to the challenges faced there a year ago as the company made significant operational improvements in the face of lower volumes.
In the United Kingdom, Pilgrim’s Moy Park operations were challenged by higher feed ingredient costs and lockdown restrictions in that market.
Fabio Sandri, chief executive officer, said that while the first three months of 2021 posed many challenges, there are positives coming out of Q1 and for the rest of the year.
“During Q1, the market environment in the US improved throughout the quarter, including a challenging February in part due to the significant weather event in the Southeast, before a very strong recovery as we exited the quarter,” he said. “With gradual loosening of restrictions, as a result of the increase in vaccinations, the market has been incrementally improving, especially in foodservice.
“The market for commodity large bird deboning experienced the largest improvement relative to the same period a year ago. Our retail and QSR results have remained solid due to strong demand across our customer base despite higher input and operating costs, and less than optimal mix due to significant labor shortages and COVID-19. Our Prepared Foods business remained resilient considering the challenging demand environment. The business continues to grow its sales in the branded segment, reflecting the investments made over the past few years, and we anticipate stronger results as COVID-19 restrictions are gradually lifted throughout 2021.”