High feed costs leads to 2Q loss for Pilgrim's Pride
May 01, 2007
by Keith Nunes
PITTSBURG, TEXAS — Pilgrim’s Pride Corp. sustained a loss of $40,077,000 for the second quarter of fiscal 2007, ended March 31. This compared with a loss of $31,954,000 for the same period during fiscal 2006. Sales for the quarter were $1,993,965, up 58% compared with $1,265,709,000 for the second quarter of fiscal 2006.
"Our financial performance in the second quarter of fiscal 2007 reflects some of the significant operating challenges faced by U.S. chicken processors during that period," said O.B. Goolsby Jr., president and chief executive officer. "Feed ingredient prices remain at very high levels amid rapidly growing demand for corn-based ethanol. While we have succeeded in passing along some of these higher costs to our customers this year, most of the benefit from those price increases was not fully realized in the second quarter."
For the first half of fiscal 2007, Pilgrim’s Pride posted a loss of $48,812,000, which compared with a loss of $6,276,000 during the first half of fiscal 2006.
Sales for the company’s U.S. operations returned to profitability late in the second quarter as production cutbacks in the U.S. helped strike a better balance between production and demand, Mr. Goolsby said.
"We’re cautiously optimistic about the second half of the fiscal year," he said. "We believe that the combination of lower industry production levels year-over-year, should they remain in place, and stronger pricing heading into the summer months will lead to continuing improvement in our financial results for the remainder of the year."
On Dec. 26, Pilgrim’s Pride acquired Gold Kist, Inc., Atlanta, and became the largest chicken processor in the world. Pilgrim’s Pride’s second-quarter results include charges of $14.1 million related to the early extinguishment of debt incurred to finance the acquisition.