US chicken group Pilgrim’s Pride has posted lower sales and profits for the third quarter of the year.
The company said yesterday (26 October) that net sales were down at $2.03bn, compared to $2.11bn for the same period last year.
Pilgrim’s Pride booked a fall in operating income to $164m, versus the $231m it generated in the corresponding period of 2015. Adjusted EBITDA for the third quarter declined 23.1% to $210m.
Net income for the third quarter was also down, hitting $98.7m, compared to $137m in the same period in 2015.
However, CEO Bill Lovette said ongoing investments by the company “signify our commitment to look for new sources of potential earnings driver while lessening the impact of volatile commodity markets in the long run”.
Lovette said the company’s fresh business continued to perform well in the third quarter “driven by our differentiated portfolio strategy of having presence in all three bird sizes and strong relationships with key customers”.
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Retail demand for Pilgrim’s birds “remained robust despite concerns about greater availability of other competing proteins”, Lovetter said. “Within exports, volumes are also improving from a year ago, which improves value for the back half of the bird, and supportive of the overall cutout.”
Lovette said the market environment in Mexico during the third quarter “followed its normal seasonality and our team members were relentless and continued to improve on the operating performance of the legacy business as well as implement synergies with the newly acquired assets”.
“Despite the impact of unfavourable grain cost and exchange rate, our profitability in Mexico has remained steady compared to last year, which is a positive sign of the potential leverage we have within our operations,” Lovette said. “The outlook for Mexico remains very strong and we will continue to grow our offerings in the region, together with leveraging our strong fresh brand to leverage the growth of our prepared foods business.”
Earlier this year, Pilgrim’s detailed a $190m strategic capital investment plan, saying the cash would be used to “enhance growth” with key retailers as well as increasing production of its Pilgrim’s Pierce Chicken brand.
Looking ahead, Lovette said the conversion of the company’s existing facility to certified USDA organic chicken production “is proceeding well and we plan to have the first chicken to market in Q1 of 2017”.
Lovette added: “We are starting work on converting one of our case-ready plants to produce ABF, veg-fed chicken. Together with our prior announcements on organic and ABF Fresh chicken as well as further processed products, we believe the latest conversion reinforces our strategy to better resonate with new consumer trends for more natural products while adding further value to our portfolio and supporting the growth of key customers.”