Pilgrim's Pride warns of 'significant loss' in Q4
September 25, 2008
by Keith Nunes
PITTSBURG, TEXAS — Pilgrim’s Pride Corp., the world’s largest chicken processor, warned shareholders and the investment community early Thursday morning it will face a "significant loss" in its fiscal fourth quarter ended Sept. 27. The company attributed the pending loss to high feed-ingredient costs, continued weak pricing and demand for chicken breast meat, and "the significant negative impact of hedged grain positions during the quarter." Adding pressure to the company’s financial position is more than $1 billion in debt it took on with the acquisition of Gold Kist, Inc. in January 2007.
As a result of the fourth-quarter loss, Pilgrim’s Pride said it does not expect to "be in compliance with its fixed-charge coverage ratio covenant under its principle credit facilities for the fiscal year ending Sept. 27." The company does anticipate being in compliance with its covenants by Oct. 28, and said it believes it has reached agreements with the parties involved and will continue to receive liquidity under its credit facilities.
Prior to the company’s announcement, Pilgrim’s Pride shares dropped 38% in heavy trading on Wednesday, Sept. 24. Trading was halted on Wednesday prior to the company’s Thursday morning announcement.
In early Thursday morning trading, shares of Pilgrim’s Pride stock declined 44% to $3.65 per share. When trading was halted on Wednesday the company’s share price was $6.36.