Pilgrim's Pride to re-open plants; other poultry shares decline

As Pilgrim's Pride announced plans of re-opening plants closed during its recent financial troubles, poultry shares of major US processors fell yesterday, May 6.

Investors in Tyson Foods and Sanderson Farms saw both companies' stocks fall after Pilgrim's, which is revamping its business.

Pilgrim's Pride announced plans to re-open its chicken processing plant in Douglas, Georgia by January 2011. The company also intends to re-open two other idled facilities, one by mid-2011 and the other by spring 2012.

The re-opening of these three plants will result in a production increase of 10%, or around 3.5 million birds per week, but Pilgrim's Pride believes an improving economy will boost consumer demand for chicken.

"Pilgrim's Pride and the industry have taken out significant production capacity over the past two years. We fully believe that with the strengthening economy and improving fundamentals, consumer demand for chicken is increasing," said president and CEO Don Jackson.

Pilgrim's shares tumbled 22.4% yesterday, closing at US$8.66, as the market reacted to the prospect of a higher supply of chicken depressing prices, although yesterday the company also reported a net loss of US$45.5 million for the first quarter of the year.

Shares in Tyson dropped 4.3% to US$18.58 whereas Sanderson's stock went down by 7.1% to US$53.58.