Pilgrim’s Pride reported third-quarter 2018 results this week, showing that net sales for the quarter were $2.70 billion, down 3.2% from the same quarter last year. Net income during the quarter was $29.3 million, down significantly from $232.6 million in the 2017 third quarter.
Bill Lovette, chief executive officer of Pilgrim's, said conditions in the third quarter “in the U.S. markets continued to be mixed, with the commodity segment experiencing counter-seasonal and weak pricing, whereas the less commodity businesses were better balanced. Despite challenging market conditions in commodity chicken, the investments we made over the past few years, the recent acquisitions and our capture of operational improvements are adding diversification and differentiation to the evolution of our portfolio to deliver more resilient performance regardless of specific market conditions.”
In Europe, the company’s integration is tracking better than expectations and slightly ahead of its $50 million synergy target for the next two years, supporting a margin increase of 130 basis point over last year, Lovette noted.
“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.”
As part of the integration activities, the Pilgrim’s 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, he said.
Supply in Mexico during the third quarter grew more than expected as a reaction to strong prices in the first half and also as a result of outstanding growing conditions affecting market prices, Lovette explained.
“Prices are already recovering, and while Mexico can be volatile quarter to quarter, historically our operations have produced very good margin performance on a full-year basis, and we expect this trend to continue in the future,” he said.
Prepared Foods are growing at a double-digit rate, Lovette said, and are generating strong results under both premium Pilgrim’s and Del Dia to drive the evolution of the company’s Mexican portfolio towards more differentiated, higher-value products and expanded margins.