November 10, 2004

 

 

Pilgrim's Pride Records Strong Quarterly Earnings
 

Quarterly earnings for Pilgrim's Pride Corp. have nearly tripled, partly due to the ConAgra acquisition. A stronger-than-expected 2005 profit is also forecast, pushing shares up 20 percent. The company is the No. 2 poultry producer in the US.

 

The Pittsburg, Texas-based company expects strong growth thanks to lower feed costs and the smooth integration of the former ConAgra Foods Inc. chicken division, which was acquired last year.

 

During the fiscal fourth quarter ended Oct. 2, Pilgrim's Pride profit increased to $72.3 million or $1.09 per share, compared with $25.1 million or 61 cents per share, last year.

 

Earnings would have been $62.6 million, or 95 cents a share if a gain due to an insurance payment for a 2002 meat recall and a restructuring charge are excluded. Wall Street analysts on average expected 82 cents, according to Reuters Estimates.

 

"It was definitely a good quarter," said Todd Duvick, research analyst with Banc of America. "Strong demand for chicken, very strong prices, and better prices on the feed side. It is definitely going to help them."

 

Feed is a major cost to chicken producers, and prices for feed grain, particularly corn, have plunged in response to an expected record large US corn harvest.

 

The company projected 2005 earnings of $2.60 to $2.90 per share, compared with $2.00 this year. Wall Street on average had expected $2.41 in 2005, according to Reuters Estimates.

 

Pilgrim's became the nation's second-largest poultry producer when it bought the ConAgra poultry unit last November for $300.8 million in cash and 25.4 million in shares of common stock.

 

"Our US chicken business continues to show signs of strength and the rapid realization of the synergies in connection with the ConAgra acquisition has allowed our financial performance to be stronger than we previously projected," according to Rick Cogdill, Pilgrim's chief financial officer.

 

Revenue for the 2004 fourth quarter grew to $1.49 billion from $709.47 million a year ago.

 

The company also estimated fiscal first-quarter 2005 earnings of 50 to 60 cents per share, compared with 20 cents a year earlier. The 2004 first fiscal quarter, which ended in January, did not fully reflect the ConAgra purchase.

 

Fiscal 2005 should feature "favorable consumer trends, rising export demand, and projections for a further drop in commodity grain prices," Pilgrim's President and Chief Executive O.B. Goolsby said in the earnings report.

 

Last year's fourth-quarter results were affected by one-time items that increased results by 56 cents per share. Year-earlier earnings would have been 5 cents per share if those are excluded.

 

Pilgrim's Pride shares were up $5.42, or 19 percent, at $34.25 on the New York Stock Exchange on Monday afternoon. The stock earlier in the session reached $34.65, the highest level in a year.