August 2, 2010

Pilgrim's Pride Corporation (PPC) reported Thursday (July 29) a decline in profit for the second quarter, chiefly due to lower revenues and margins.

For the second quarter, net income attributable to PPC decreased to US$32.92 million from US$53.24 million last year. On a per-share basis, earnings fell to US$0.15 from US$0.72 last year, but on a much higher number of shares outstanding.

The poultry company also said it is cautiously optimistic about industry fundamentals in the second half. Shares are currently trading down by over 8%. On average, three analysts expected the company to report earnings of US$0.18 per share. Analysts' estimates typically exclude special items.

The recent quarter's results include nonrecurring administrative restructuring charges of US$0.05 per share related to writing down the net book value of the company's former corporate headquarters building in east Texas and a satellite corporate office building in Atlanta. Those offices were recently closed as part of the relocation of the corporate headquarters to Greeley, Colorado.

Net sales for the same quarter declined to US$1.71 billion from US$1.78 billion in the comparable quarter a year ago. Three analysts were looking for revenue of US$1.79 billion in the second quarter. Second-quarter operating income plunged to US$51.89 million from US$108.60 million last year.

Chief Executive Don Jackson said he is cautiously optimistic about industry fundamentals heading into the second half of the year, as overall production is estimated to rise 2.7% in 2010. He noted that the estimates are still well below the pre-cutback levels of 2008 and supplies at this point remain fairly tight.

"Based on the current supply across all three meat proteins, I believe the industry will remain relatively strong. In general, our customers appear to be optimistic, and I believe we will see more price support for chicken as supplies remain below pre-cutback levels," Jackson added.

Looking ahead, the company said that cost improvement in the short-term, and product mix and price in the long-term, continue to be its largest opportunities for creating value.

PPC is currently trading at US$6.40, down US$0.56 or US$8.05%, on a volume of 0.5 million shares on the New York Stock Exchange (NYSE).