Source: MEATINGPLACE, 10/28/11

Pilgrim’s Pride Corp. reported a larger-than-expected loss in the third quarter as it coped with higher feed costs and lower chicken pricing.

“As an industry we continue to see depressed chicken prices and they remain below levels sufficient to offset the higher cost of feed ingredients,” Pilgrim’s Chief Executive Bill Lovette said on a conference call with analysts.

But he said he sees improvement in the fourth quarter as the company focuses on operational changes and industry supply and demand fundamentals slowly normalize. “We see an upside on the horizon as tightening supplies begin to align with current demand levels,” Lovette said.

Excluding one-time charges, the loss was 52 cents per share. Analysts on average expected a loss of 43 cents per share, according to Thomson Reuters I/B/E/S. Sales rose about 10 percent to $1.89 billion. Analysts had expected $1.81 billion.

To improve results, the company is revising its pricing, rebalancing production, and reducing capital expenditures, payrolls and inventory levels while aggressively pursuing export markets, Lovette said.
Pilgrim’s is avoiding long-term contracts with customers in favor of contracts that adjust to grain and chicken price fluctuations or align with the spot market, to better manage risk, the CEO said.

Export demand is a bright spot for the company, up 62.9 percent year to date thanks to a strategy of selling more added value products rather than just leg quarters.

Pilgrim’s said it does not foresee further reductions in its production levels in 2012, after closing its Dallas, Texas, processing plant at the end of September. The company is also closing a feed mill in Staley, N.C.

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