Leading US poultry processor Pilgrim's Pride has reported a net loss of US$8.7m, or $0.13 per share, for the first quarter of the current fiscal year, against net income of $25.7m in the corresponding period last year.
 
First-quarter revenues were unchanged from the first quarter of the last fiscal year at $1.34bn.

The company attributed the loss to continuing difficulties in the chicken market, including higher ingredients costs.

"Our financial results for the first quarter of fiscal 2007 reflect the continued operating challenges facing the US chicken industry," said president and CEO O.B. Goolsby, Jr. "Sharp increases in feed-ingredient costs, driven largely by surging demand for corn-based ethanol, represent the most significant threat to our business at this time. Ultimately these higher costs will be passed on to consumers in the form of higher prices for chicken products. While market pricing for US chicken products has shown some improvement recently, thanks in part to industry-wide production cutbacks, it simply is not where it needs to be to offset these cost increases for corn and soybean meal."

Goolsby stressed the importance of executing the company's strategic plan and seizing opportunities to build the business, which would include moves to adjust product mix, strengthen brand identity with consumers, and shorten the lead time for introducing new products.

"We are confident that our continued focus on higher-margin prepared foods products, coupled with industry-wide production cutbacks, will help return us to normalised profitability when markets improve," Goolsby said.

On Pilgrim's Pride's acquisition of Gold Kist, which made the company the world's leading chicken processor in production terms and the fourth-largest meat protein company by revenues in the US, Goolsby said: "We are now ready to begin realising the compelling strategic value and benefits we envisioned from this acquisition. The integration is off to a good start. We have appointed more than a dozen integration teams composed of employees from Pilgrim's Pride and Gold Kist to drill down into every area of the business looking for opportunities to improve the way we operate and eliminate unnecessary costs."

Goolsby said the company now estimates that synergy savings resulting from the acquisition will be around $100m, an increase from the estimate of $50m made last year when it first launched its bid for Gold Kist.