Pilgrim’s Pride Posts $40.1 Million Loss
US poultry firm Pilgrim’s Pride Corporation has reported a net loss of $40.1 million, or $0.60 per share, on total sales of $1.99 billion for the second quarter, representing a widening in second quarter losses, due to costs relating to the acquisition of Gold Kist.
While revenue rose 58% to $1.99 billion, from $1.27 billion a year ago, the company reported a widening in losses to $40.1 million, or $0.60 per share, for the quarter ended March 31, 2007. This compares to the second quarter of fiscal 2006, when the company reported a net loss of $32.0 million, or $0.48 per share.
The quarterly results include, for the first time, the acquisition of Gold Kist, which was completed in December 2006. Results also include charges related to the early extinguishment of debt incurred in connection with the financing for the acquisition.
“Our financial performance in the second quarter of fiscal 2007 reflects some of the significant operating challenges faced by US chicken processors during that period,” said OB Goolsby, Jr., Pilgrim’s Pride president and CEO. “Feed-ingredient prices remain at very high levels amid rapidly growing demand for corn-based ethanol. While we have succeeded in passing along some of these higher costs to our customers this year, most of the benefit from those price increases was not fully realized in the second quarter. Additionally, we are continuing to address pricing opportunities in a number of below-market customer contracts we acquired through the Gold Kist transaction.”
Mr Goolsby noted, however, that the company’s US operations returned to profitability late in the second quarter – and that it is currently profitable in the third quarter – as production cutbacks in the US helped strike a better balance between production and demand. In addition, US market prices for chicken products strengthened heading into the summer. Its Mexico operations have also returned to profitability in the third quarter to date, and current US production at Pilgrim’s Pride is “in line” with the company’s previously announced 5.0% reduction target when compared to year-ago levels.
“We are cautiously optimistic about the second half of the fiscal year. We believe that the combination of lower industry production levels year-over-year, should they remain in place, and stronger pricing heading into the summer months will lead to continuing improvement in our financial results for the remainder of the year,” Mr Goolsby said. “On the Gold Kist integration front, our employees are investing a lot of time and effort in the integration, and I’m excited by the tremendous opportunities they have uncovered for improving our combined businesses. They are clearly focused on our common goal of delivering the best possible service and value to our customers every day and are making good progress toward achieving our previously announced estimate of $100 million in synergy savings.”