GREELEY, COLO. – Net income attributable to Pilgrim’s Pride Corp. fell 30% in the first quarter ended March 31. A subsidiary of São Paulo, Brazil-based JBS SA, Pilgrim’s Pride posted net income of $84,011,000 in the first quarter, equal to 34c per share on the common stock, down from $119,418,000, or 48c per share, in the same period a year ago.
Net sales also were lower in the period, easing to $2,724,675,000 from $2,746,678,000.
“After a very challenging market in 2018, we experienced a much better environment within our U.S. operations during Q1 particularly in commodity large bird deboning, with demand from retailers and Q.S.R. operators rebounding as they recognized the value of chicken,” said Jayson Penn, chief executive officer of Pilgrim’s Pride. “Feature activities normalized to seasonal levels throughout the quarter and the momentum has been sustained into early Q2. Commodity boneless prices have already surpassed levels from a year ago and are close to the five-year average, while wing prices are near historical highs. We have been heavily investing in further differentiating our portfolio to increase our capacities and capabilities to meet customer expectations. The investments in the operations and the focus of our people have yielded an increase in performance, and further growth prospects remain available.”
Pilgrim’s adjusted operating income margins were 6.1% in the United States, 2.9% in Mexico and 2.5% in its European operations.
The company said weaker seasonal markets in Mexico affected results, but conditions should improve in the second quarter.
“Chicken demand was also affected by more availability of imported pork from the U.S. during the quarter, but we believe chicken demand can continue to grow in-line with historical rates longer term,” Mr. Penn said. “The environment has already started to recover in Q2, and prices have begun to react positively, with growing conditions reverting back to normal, demand improving, and competition from pork imports declining. Our Prepared Foods have continued to grow at a double-digit rate and are generating great results under both premium Pilgrim’s and Del Dia brands to drive the evolution of our Mexican portfolio toward more differentiated, higher-value products giving us a clear path to margin expansion.”
The company said Europe continued to see a substantial increase in input costs, especially ingredients, higher utilities, labor and packaging.
“These increases were partially offset by cost reduction initiatives, synergies and price adjustments, some of which have taken slightly longer than expected to be passed on and reflected in customer contracts,” Mr. Penn said. “Despite the impact in results, we expect an improvement month over month as we adjust our prices based on key customer contracts and expect the full recovery within our pricing models.”