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Pilgrim’s Pride results lower on ‘challenging environment’

TAGS: Business
Pilgrim's Pride pilgrims-brands.png
Weather disruptions, chicken markets weigh on company’s financials.

Pilgrim’s Pride Corporation reported net sales during Q4 2018 were $2.66 billion, down 3.1% from the same period last year. The company also reported year-end 2018 financial results.

Fourth Quarter Results

  • Net sales of $2.66 billion, down 3.1% versus same quarter last year.
  • Adjusted net income of $21 million and adjusted EPS of $0.09.
  • Adjusted operating income margins of 0.3% in U.S., 5.3% in Mexico and 3.8% in Europe operations, respectively, adjusted for non-recurring items related to weather events, Moy Park acquisition and Exchange Rate.
  • Adjusted EBITDA of $111 million, or a 4.2% margin.

2018 Highlights

  • Adjusted operating income margins of 4.2% in U.S., 8.8% in Mexico and 4.3% in Europe operations, respectively.
  • Adjusted EBITDA of $798 million, or a 7.3% margin.
  • Portfolio strategy and geographic diversification reducing the impact of challenging market conditions, specifically in U.S. commodity chicken. We remain motivated to pursue additional growth potential and product differentiation in 2019, aligning our strategic priorities to continue providing stronger platforms for the future.
  • Prepared Foods grew 15% in the U.S. and 33% in Mexico, and is increasing its momentum, realizing the results of investments made over the past few years to further widen our product and brand portfolio, strengthen key customer relationships, and improve margin consistency.
  • Moy Park integration is better than expected; operations and profitability improving with synergies captured despite headwinds from feed costs caused by regional drought.

“In the U.S. we endured a very challenging environment in commodity chicken, slower than expected recovery from weather disruptions at some complexes, partially offset by an improvement in operating results from Prepared Foods,” said Bill Lovette, chief executive officer of Pilgrim's.

The company reported improved performance in Europe through expected synergies but was impacted by higher feed inputs as a result of a drought that will be passed to its prices in coming quarters.

The company’s Mexican operations produced a very strong first half, a weaker than seasonal Q3, followed by a rebound in Q4.

“The diversity of our portfolio of bird sizes, geographical market exposure, our culture and our people, are what fundamentally differentiate us from the competition, giving us the potential to reduce volatility and generate higher margins over time, and the results for 2018 represented the power of that strategy,” stated Lovette. “As we begin 2019, conditions in the U.S. commodity markets including exports are already recovering, supporting OECD-FAO data that over the longer-term chicken as a protein will continue to outperform in terms of growth potential globally.”

The company reported that results from Prepared Foods are accelerating in momentum with a strong 15% increase in volume in the U.S. and 33% increase in Mexico, reflecting the investments made over the past few years to grow capacities and capabilities to meet customer expectations.

“The build out for innovation and marketing to drive future strong growth continues,” Lovette said. “We believe the prospects for more growth remain and the improvement in performance is sustainable. To further support the growth initiatives, we are also transitioning to a more innovative package design.”

In regard to the company’s European (Moy Park) operations, it said margins have increased since the acquisition just a year and a half ago and are moving in a positive trajectory.

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