February 1, 2007

Pilgrim's reports first quarter loss, says higher corn prices threatening profits

Pilgrim's Pride Corporation, the largest chicken producer in the US, reported a net loss of US$8.7 million for the first quarter ended December 30, 2006. on total sales of US$1.34 billion.

The results reflected the continued operating challenges facing the US chicken industry, said O.B. Goolsby, Jr., Pilgrim's Pride president and chief executive officer, in a news release.

Goolsby said that sharp increases in feed-ingredient costs, driven largely by surging demand for corn-based ethanol, is threatening the company.

Echoing Tyson's comments a few days earlier, the company said these higher costs would be passed on to consumers in the form of higher prices for chicken products.

Goolsby pointed out that while market pricing for US chicken products has shown some improvement recently, it had not been enough to offset cost increases for corn and soymeal.

Goolsby promised Pilgrim's Pride would seize opportunities to build its business, whether by adjusting product mix, strengthening brand identity with consumers, or shortening the time it takes to bring new products to market.

Pilgrim's Pride recently acquired the third largest chicken producer in the US, Gold Kist Inc, creating the world's leading chicken company in terms of production.