Pilgrim’s Pride reported lower financial results this week for its second quarter ended June 28, 2020, as a result of impacts from the COVID-19 pandemic. The company reported a net loss of $6.04 million, compared with a profit of $170.08 million during the same period last year.
Net sales during the quarter were $2.82 million, down from $2.84 million in the second quarter of 2019. Despite the decline, net sales for the first half of the year were $5.89 million, up from $5.57 million in 2019.
“We are once again extremely proud of our team for their continued commitment, dedication and hard work in supporting our ability to keep our team members safe and healthy and allowing us the capability to maintain production and supply to our customers during this unprecedented crisis,” Pilgrim's interim chief executive officer Fabio Sandri stated. “Despite the continuing volatility and very challenging markets in [the second quarter] due to COVID-19, our diversified strategy has continued to produce respectable results in relative performance to industry competition and deliver more resilient performance, regardless of changes in specific market conditions.”
During the entire second quarter, Sandri said Europe generated operating results similar to a year ago, although they were more than offset by tough market dynamics in the U.S. and Mexico.
“After a very challenging beginning of the quarter, markets have adapted. During the month of June, results were quite encouraging and showing a noticeable improvement globally. Compared to June of last year, the U.S. was roughly the same -- Europe slightly better and Mexico in line -- even when considering all the disruptions, less-than-optimal product mix and added operating costs because of COVID-19.”
In the U.S., Sandri said the market was significantly challenged by COVID-19 during the first half of the second quarter before a gradual loosening of travel and movement restrictions drove an improvement in channel demand, especially from foodservice.
Similar to the first quarter, Sandri relayed that large-bird deboning was once again the most volatile in the quarter, with quick moves between the lows and the highs.
Operationally, however, Pilgrim's continues to improve relative performance versus the industry across all business units, including in large-bird deboning.
Further, Sandri said the company continues to adapt quickly to changes in channel demand by adjusting the mix of production capabilities, supported by close partnerships with key customers, a strong focus in execution by team members, the geographical diversity of the company’s footprint and its presence across all bird size categories.
He noted that unlike the first quarter, "Mexico remained challenged as the effects of weak macro conditions -- which added to uncertainties in consumer spending -- have persisted. In addition, the peso continued to be weak, putting additional pressure on the results. Industry prices were also below seasonality, driven by much better-than-expected growing conditions, before reverting closer to normal levels by the end of the quarter.”
An increased share of non-commodity products, strong execution and growth in Prepared Foods have helped partially offset the softness, Sandri added.
The company’s European operations performed in line with last year, driven by strong retail demand and despite the significant impact of COVID-19 on the operations, as strong internal operating performance and improved selling, general and administrative management helped in mitigating the difficult environment.
Also, Pilgrim's said it has maintained improved results from the newly acquired European assets, with earnings before interest, taxes, depreciation and amortization continuing to increase, "driven by strong demand at retail, partially offset by a reduction in foodservice; continuing strength in pork exports, especially to China, as well as the implementation of operational improvements and synergy capture.”