February 28, 2009

Pilgrim's Pride has announced plans to idle three of its 32 US chicken processing plants by mid-May as part of its reorganisation plans.

The idling of these three underperforming plants is intended to improve the company's product mix by reducing commodity production and to significantly reduce its costs amid an oversupply of chicken and weak consumer demand resulting from a national recession.

The plants that the company plans to idle are located in Douglas, Ga.; El Dorado, Ark.; and Farmerville, La. Approximately 430 independent contract growers who supply birds to these three plants also will be affected.

There will not be any disruption in the supply of product to retail, foodservice and industrial customers as a result of the idling of these plants, since these changes will only eliminate production of excess commodity chicken. The company plans to keep the plants idle until it believes that additional production capacity is needed.

Pilgrim's Pride expects to generate annualized net savings of approximately US$110 million from idling these three plants and to incur one-time, pre-tax restructuring charges of approximately US$35 million, before any potential asset impairment charges, primarily in the second quarter of fiscal 2009. This includes approximately US$8 million of estimated non-cash restructuring costs.

The announced action will reduce Pilgrim's Pride production of low-value, commodity meat that is a financial drain on the company without affecting any core business lines or customers, said Don Jackson, president and chief executive officer.

The idling of these three plants, when completed, will result in a reduction of 9-10 percent in total pounds of chicken produced by the company.

In addition, the company announced it will be consolidating its protein salad production from Franconia, Pa. to its further-processing facility in Moorefield, W. Va.

Pilgrim's Pride Corporation employs approximately 47,000 people and operates chicken processing plants and prepared-foods facilities in 14 states, Puerto Rico and Mexico. The company's primary distribution is through retailers and foodservice distributors.