US chicken group Pilgrim’s Pride has reported a 37.5% fall in operating income for the second quarter of 2016 – down to US$237m from US$378m in the same period a year ago.
Net sales dipped by 1.2% to US$2.03bn in the first half of the year from US$2.05bn previously. Net income for the quarter was US$152.9m.
However, CEO Bill Lovette said the company had generated “the intended results and created a unique and meaningful advantage over competitors with less breadth in their portfolio”.
“During Q2, our results further improved sequentially compared to the last two quarters, Lovette said. “We structured our portfolio to capture the strong commodity markets while lessening the impact of weaker markets to generate lower volatility and higher margins over the mid to long-term.”
“Our operations in Mexico were a strong contributor to the Q2 results driven by an improved supply/demand environment, better operating performance, and increased synergies with the newly acquired assets,” Lovette said. “We are continuing to close and have meaningfully narrowed the gap in performance between our legacy and the newly acquired Northern Mexico operations. To further diversify our Mexico operations and grow our value-added segment, we are initiating a strategy to leverage our premium Pilgrim’s name while continuing to pursue opportunities through the popular Del Dia brand.”
Lovette said Pilgrim’s, which is majority-owned by Brazil’s JBS, intended to launch a range of ABF veg-fed artisanal chicken sausages “to demonstrate our commitment to growing our Prepared Foods operations and to further leverage our leadership in the ABF”. The move follows the company’s recent decision to enter into organic Fresh Chicken.
The new product will be fully cooked and minimally processed using all natural and no artificial ingredients or nitrites, Lovette said. “Similar to our ABF veg-fed and organic Fresh Chicken programme, this represents our effort to better resonate with new consumer trends for more natural products while adding further value to our portfolio.”
Lovette said the new line, together with previously-announced investments at its processing facility in Moorefield, West Virginia, “signify our commitment to Prepared Foods as an important source of future earnings growth while lessening the impact of volatile commodity markets in the long run”.
Earlier this year, the company detailed a US$190m strategic capital investment plan. Pilgrim’s said the cash would be used to “enhance growth” with key retailers as well as increasing production of its Pilgrim’s Pierce Chicken brand.