GREELEY, COLO. – Pilgrim’s Pride Corp., a subsidiary of São Paulo, Brazil-based JBS S.A., reported net sales of $2.843 billion for the second quarter, up 0.2% compared with $2.836 billion reported in the year-ago quarter.
For the second quarter ended June 30, 2019, net income attributable to Pilgrim’s Pride was $170.1 million, or $0.68 per diluted share, compared with $106.3 million, or $0.43 per diluted share, reported in the second quarter of 2018.
The company reported an operating income of $279.6 million for the second quarter, compared with $185.1 million reported in the second quarter of 2018.
“After a very challenging market in Q2 of last year, we experienced a much better environment in the U.S. during Q2 2019, particularly in commodity large bird deboning, while feature activities at retailers and Q.S.R.s returned to seasonal levels,” said Jayson Penn, chief executive officer of Pilgrim’s Pride. “Large-bird cutout tracked much closer to the five-year average, driven by strengths in wings, leg quarters and tenders. We remain committed to our Key Customer strategy, which is relevant to our growth. Revenues from Key Customers have more than doubled over the last eight years, reducing our relative dependency on pure commodity sales and reducing volatility.”
Mr. Penn also said there were opportunities for additional growth, and the company will invest to differentiate the Pilgrim’s portfolio further.
Pilgrim’s Pride's adjusted operating income margins were 9.8% in the U.S., 17.5% in Mexico and 4.5% in its European operations. Adjusted EBITDA for the quarter was at $349.3 million, up from of $259.3 million in the second quarter of 2018.
The company mentioned a strong recovery in the Mexican market, which will give a better chance for normal financial growth to return.
“Conditions in Mexico significantly rebounded from a counter-seasonally weak Q1," Mr. Penn said. "A return to much more normal growing conditions together with strong demand drove a very positive price reaction throughout the quarter. The availability of imported pork from the U.S. has also significantly diminished, and presented much less competition to demand for chicken. 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 and margin expansion.”
Pilgrim’s also noted major increases in European operations input costs due to feed ingredients, higher utilities, labor and packaging. Mr. Penn outlined the plan to remain successful the rest of the year.
“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,” he said. “Despite the impact in results, we expect an improvement month over month as we adjust our prices based on key customer’s contracts and expect the full recovery within our pricing models.”