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Pilgrim’s posts profit; says industry production to stay constrained
Story Date: 4/30/2012
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Source: MEATINGPLACE, 4/27/12
Pilgrim’s Pride Corp. reported its best first-quarter results in seven years and predicted chicken breast prices would strengthen as the industry remains disciplined, keeping supply and demand in balance in 2012.
Chief Executive Bill Lovette, on a conference call with analysts, said most producers have been turning a profit since January, but balance sheets as a whole still need to be rebuilt.
“We believe there will be continued discipline in 2012 on the part of the industry participants as we all recover from the challenges last year,” Lovette said.
General profitability should continue, and supply and demand will be adequately balanced, if the industry continues to set about 200 million eggs per week, Lovette said.
“The combination of higher export volumes, lower production and lower inventory and cold storage levels is keeping the amount of chicken available for domestic consumption more consistent with domestic demand,” he said.
Breast meat prices slumped late January into February due to heavier bird weights brought on by unseasonably warm weather. But he said weights have come back to around last year’s levels and are likely to remain there.
“We expect breast prices to rally as we head into the summer grilling season,” Lovette said.
Pilgrim's Pride reported a first-quarter net profit of $39.6 million, or 18 cents a share, compared with a year-ago loss of $119.9 million, or 54 cents a share.
Analysts on average had expected a profit of 8 cents a share, according to Thomson Reuters.
Sales were essentially flat at $1.89 billion.
Operational improvements lifted the company’s earnings. Lovette said Pilgrim’s converted its operations to manual deboning during 2011, resulting in significant yield improvements. In addition, supervisors are being measured and rewarded based on their performance in five areas: safety and health, quality, yield, cost and turnover, he said.
“Our next goal is to strategically grow value-added exports,” Lovette said. Export sales helped reduce burdensome cold storage supplies last year, he noted, and Pilgrim’s was able to boost prices on its exports in the first quarter, compared with a year ago.
For more stories, go to http://www.meatingplace.com/.
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