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Weaker market conditions send Pilgrim’s Pride profits lower

TAGS: Business
Mexico demand continues to boost company’s results.

Although sales rose 3.1% to $2.84 billion during the second quarter of 2018, Pilgrim’s Pride reported net income of $106.5 million, or 43 cents per share, a sharp decline from $233.6 million, or 94 cents per share, posted during the same quarter last year. Bill Lovette, Pilgrim's chief executive officer, attributed the lower results to mixed and weaker market conditions.

“During [the second quarter], market conditions within our U.S. operations were mixed, with the commodity segment counter-seasonal and weak, whereas the less commodity businesses continued to be strong and well balanced,” he said. “Despite some volatility in feed and less-than-ideal market conditions in the commodity chicken sector, the investments we made over the past few years, the recent acquisitions and our capture of operational improvements and the strength of our small bird and case-ready businesses helped us to offset some of the impact from the commodity markets and contribute to the evolution of our portfolio in supporting our vision to become the best and most respected company in our industry.”

According to Lovette, Mexico once again delivered strong results during the quarter, providing robust operating performance as well as very good demand for chicken.

“Our volumes increased during the quarter, driving a robust [earnings before interest, taxes, depreciation and amortization] performance of 19.6%, which, together with our differentiated strategy and dedication of our team members, extended the out-performance over the main competition over the past few years.”

The company reported that Prepared Foods are growing at a double-digit rate, 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, ultimately, margin expansion.

In Europe, Lovette said Pilgrim’s is already recording an improvement in performance and seeing expected results from the integration, with significant share gained at a key customer and several other projects to further optimize relationships, highlighting how the newly acquired operations are already benefiting from the team’s enhanced focus on its key customer strategy.

“The operational improvements initiatives are also going well, and we are slightly ahead of our $50 million synergy target for the next two years, supporting a margin increase of [£70 per share],” Lovette stated. “We are innovating in the market in Europe by continuing to develop exciting products to satisfy a growing consumer demand for chicken and alternative forms of protein, which can be easily adapted to other markets we participate in.”

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