October 31, 2011
Pilgrim's Pride records third consecutive loss
As chicken feed price continues to drive costs above revenues, Pilgrim's Pride Corp. (PPC) recorded its third consecutive quarterly loss on Friday (Oct 28).
The Greeley, Colo.-based poultry processor said it lost US$162.5 million in the quarter, or US$0.76 a share. A year ago, the company booked profits of US$57.9 million, or US$0.27 a share.
A number of one-time charges further soured the results. The company disclosed US$14 million in losses tied to foreign-currency transactions and US$11 million in restructuring charges.
Shares in Pilgrim's Pride were recently down 2.7% to US$5.11.
Pilgrim's struggles, like those of many other chicken processors, are tied to a withering combination of rising feed costs and persistently low wholesale prices for chicken meat, especially breasts. The industry's downturn is the latest in a perpetual boom-and-bust cycle that has, over many years, forced processors to consolidate or shut down. Four processors have filed for bankruptcy in the last 10 months and Pilgrim's itself emerged from bankruptcy protection at the end of 2009.
The company has vowed to sign contracts with customers that can change more quickly with feed prices. "We are making decisions now that will drive profitability," said Chief Executive Bill Lovette, in a statement, adding there are signs chicken pricing will improve heading into 2012. The company has lost more than US$400 million so far this year.
Sales were up 10% during the quarter to US$1.89 billion. Costs, meanwhile, rose 25% to US$1.95 billion. The company's gross margin slumped to negative 3.3% compared to positive 9.1% a year ago.