GREELEY, COLO. – Volatility in commodity markets, weak prices for chicken and challenges in Mexico were headwinds for JBS S.A. unit Pilgrim’s Pride Corp. in the third quarter of 2018.
For the most recent quarter ended Sept. 30, net sales slid 3.2% to $2,697.6 million from $2,793.9 million in the third quarter of 2017.
Net income attributable to Pilgrim’s Pride was $29,310 million, or 12c per diluted share, compared with $232,680 million, or 93c per diluted share, in the year-ago period.
Supplies of chicken in Mexico grew more than expected during the third quarter as a reaction to strong prices in the first half and favorable growing conditions, said Bill Lovette, chief executive officer of Pilgrim's Pride. Prices already are recovering, and the company expects the trend of good margin performance on a full-year basis to continue.
“Prepared Foods are growing at a double-digit rate and are generating strong results under both premium Pilgrim’s and Del Dia to drive the evolution of our Mexican portfolio towards more differentiated, higher-value products, and expanded margins,” Mr. Lovette said.
The integration of Moy Park, which Pilgrim’s acquired in 2017 for $1.3 billion, continues to exceed expectations. The company is slightly ahead of its $50 million synergy target for the next two year, Mr. Lovette said.
“The results, given the adverse scenario of feed inputs, are a proof of our more stable business model, while our team members improved the operations and contributed to the strong performance by continuing to focus on cost optimization, cost control, excellent customer relationships, synergy capture and a culture of constant innovation while still maintaining a consistent margin performance of the business,” he said. “As part of the integration activities, our team is driving for an increased focus on utilization of the whole chicken by opening up more opportunities and diversifying into new markets to improve the cutout.”
Operating income margins during the third quarter were 4% in the United States and 5.4% in Europe. In Mexico operations, Pilgrim’s reported a decline of 4% in operating income margins.
For the nine months ended Sept. 30, Pilgrim’s reported net sales of $8,281 million compared with $8,025.5 million in the year-ago period.
Net income attributable to Pilgrim’s Pride for the nine months ended Sept. 30 was $255,269 million, or $1.03 per diluted share, compared with $560,242 million, or $2.25 per diluted share, in the same period of 2017.