Source:  Chris Scott, MEATINGPLACE.COM, 5/17/11


Standard & Poor’s Ratings Services (S&P) set its outlook for Pilgrim’s Pride Corp. at negative in part to reflect concern about higher feed costs for poultry and weaker-than-anticipated pricing affecting margins in fiscal 2011.

The ratings agency said the Greeley, Colo.-based poultry processor should see operating margins for 2011 fall by more than 250 basis points compared with year-ago results because of record-high grain costs and an oversupply of chicken inventories in recent quarters. S&P added that the negative outlook and weak operating performance will result in further credit measures deterioration in upcoming quarters, possibly resulting in tight financial covenant cushions despite what S&P calls a “currently adequate liquidity position.”

Pilgrim’s Pride, majority owned by Brazilian meat processor JBS S.A., last month reported a first-quarter loss of $0.56 a share, which was more than double the loss of $0.22 a share reported a year ago because of higher feed costs, lower prices for poultry and the liquidation of some of its inventory. Just last week, the company’s stock  hit a new 52-week low at about $5.32, well below its previous 52-week high of $9.54.

Company officials are vowing to improve its balance sheet by recovering an estimated $400 million it spent to upgrade its poultry processing plants.

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