Source:  Chris Scott, MEATINGPLACE.COM, 5/3/11

A larger-than-expected loss in the first quarter of 2011 is prompting at least two industry analysts to lower their earnings estimates for Pilgrim’s Pride Corp. for the entire fiscal year.

Heather Jones at BB&T Capital Markets today reduced her fiscal 2011 estimate to a loss of $0.29 a share from a loss of $0.06. The revision was sparked by the first-quarter loss, lower cost savings expected through the rest of the year, as well as some offset by higher pricing assumptions.

Jones also projected between $520 million and $540 million for feed cost inflation this year, much higher than the $500 million projected by Pilgrim’s Pride.

Separately, Kenneth B. Zaslow at BMO Capital Markets is questioning the logic behind the company’s strategy to match supply with demand while it’s generating losses and has a degree of leverage. In addition to reducing the estimate for fiscal 2011 to an unspecified level, Zaslow expressed surprise at Pilgrim’s Pride’s “slower-than-expected” pace for generating cost savings and the modest degree of protection created by its hedge on feed prices for the rest of the year.

The company has already announced that it has covered 100 percent of its anticipated corn needs and about half of its soybean meal needs through the end of 2011.

On top of the losses in the quarter, Pilgrim’s Pride is also dealing with the effects of last week’s tornadoes in Alabama, which destroyed or impacted about 100 of its breeder houses and left two processing plants without electrical power until later this week.

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