Higher feed costs prompt Pilgrim's Pride to sustain loss
January 30, 2007
by Keith Nunes
PITTSBURG, TEXAS — Higher feed ingredient costs led Pilgrim’s Pride Corp. to report a loss of $8,736,000 for the first quarter of fiscal 2007, ended Dec. 30. During the first quarter of fiscal 2006, the company posted net income of $25,678,000, equal to 39c per share on the common stock.
"Our financial results for the first quarter of fiscal 2007 reflect the continued operating challenges facing the U.S. chicken industry," said O.B. Goolsby Jr., president and chief executive officer. "Sharp increases in feed-ingredient costs, driven largely by surging demand for corn-based ethanol, represent the most significant threat to our business at this time.
"Ultimately these higher costs will be passed on to consumers in the form of higher prices for chicken products. While market pricing for U.S. chicken products has shown some improvement recently, thanks in part to industry-wide production cutbacks, it simply is not where it needs to be to offset these cost increases for corn and soybean meal."
The company reported net sales for the quarter of $1,337,132,000, compared with $1,343,812,000 for the same period during fiscal 2006.
"Now more than ever, it is important for us to execute on our strategic plan and seize opportunities to build our business, whether by adjusting our product mix, strengthening our brand identity with consumers, or shortening the time it takes to bring new products to market," Mr. Goolsby said. "We are confident that our continued focus on higher-margin prepared foods products, coupled with industry-wide production cutbacks, will help return us to normalized profitability when markets improve."