Pilgrim’s Pride sales slip despite strong chicken demand

Company has paid $2.2 billion in special dividends over past two years.

Pilgrim's Pride Corp. has reported net sales of $1.91 billion for the fourth quarter of 2016, a 2.7% decline from its 2015 fourth-quarter results. Operating income, on the hand, was 15.3% higher, at $124.3 million, up from $107.8 million in the 2015 fourth quarter.

Net Income for the quarter was $70.6 million, or 28 cents per share, up from $63.2 million during the same period in 2015.

"Our Fresh business continued to perform well in (the fourth quarter), driven by our differentiated portfolio strategy of having a well-balanced mix of multiple bird sizes, geographical coverage and strong relationships with key customers,” Pilgrim's chief executive officer Bill Lovette said. “Robust traffic at grocery retailers is driving strong demand for our products -- a strong indication that chicken demand has remained healthy despite greater availability of other proteins.”

Lovette said the company remains committed to its prepared food operations and expects growth in 2017, with new capacity additions at Moorefield to begin contributing to volumes starting in the first quarter.

The company reported full-year net sales of $7.93 billion, a 3% decrease from $8.18 billion in 2015. Operating income was sharply lower at $713.5 million, down 37% from $1.04 billion in 2015.

"We continue to invest in facility improvements and diversify our portfolio by improving mix and offer more differentiated, innovative products to serve key customer requirements, reduce the impact of commodity markets and further raise our margin profile,” Lovette continued.

Pilgrim’s spent a total of $270 million on capex in 2016, higher than the company’s depreciation and a record for the company, including strategic projects that will strengthen operational efficiencies and tailoring customer needs to improve competitive advantages.

Signifying its commitment to generate shareholder value by optimizing capital structure while pursuing growth strategy, Lovette said the company paid a total of $2.2 billion in special dividends over the past two years, repurchased more than $200 million in shares, successfully integrated its Mexican acquisition and acquired GNP Co. to broaden Pilgrim’s geographical footprint and enhance its portfolio of on-trend, value-added products.

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