Pilgrim’s Pride, the US poultry group, today (25 September) admitted that it expects to see a “significant” loss during its fiscal fourth quarter and that it will break part of its lending agreements.
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The company issued the statement after shares in the business slumped yesterday, causing trading to be halted. Pilgrim’s Pride stock fell as much as 40% and closed down 38% at US$6.36.
Pilgrim’s Pride said high feed costs, weak prices and demand for breast meat, plus the negative impact of hedged grain positions were to blame for its gloomy forecast for the quarter ending 27 September.
The expected loss means that Pilgrim’s Pride had to inform lenders that it is unlikely to meet part of its lending agreements. The company said it does not expect to be in compliance with the fixed-charge coverage ratio covenant within the agreements and has struck a deal with its lenders to waive the stipulation until 28 October.
Pilgrim’s lenders will continue to provide liquidity during the period, the company said.
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By GlobalDataLike much of the US meat sector, Pilgrim’s has suffered from high feed and fuel costs in recent months and has had to restructure its operations as a consequence.
This week, the company said a further 100 jobs would go at a plant in Arkansas. The cuts come on top of an earlier announcement that 600 posts would go at the same facility.
A series of restructuring measures announced this year have seen the company cut more than 2,300 jobs in an attempt to cut losses.
