Pilgrim's Pride reports Q3 loss of US$162.5M, in part because of non-recurring charges of US$52.7M during quarter
October 28, 2011
– Pilgrim's Pride Corporation (NYSE:PPC - News) today reported a net loss of $162.5 million, or $0.76 per share, on net sales of $1.9 billion for the third quarter ended September 25, 2011. For the comparable quarter a year ago, the company reported net earnings of $57.9 million, or $0.27 per share, on total sales of $1.7 billion.
Bill Lovette, Chief Executive Officer of Pilgrim's Pride, commented on the results, stating, "The quarter results included non-recurring charges of $52.7 million, without which our net loss per share would have been $0.52. We are at a $295 million run rate against our goal of $400 million on operational improvements, which helped provide a positive operating cash flow of $10.7 million for the quarter. We continue to drive ownership, responsibility and accountability at every level. We are making decisions now that will drive profitability going forward."
Market prices for some key chicken products were down sharply compared to a year ago. Boneless skinless breast meat in the third quarter averaged $1.27 per pound versus $1.71 a year ago, while the market price for wings was $0.89, compared to $1.19 per pound last year. The average market price for leg quarters was $0.46 per pound, up $0.09 per pound from a year ago, while Georgia Dock prices stayed essentially flat at $0.88 per pound.
Simultaneously, feed-ingredient costs remained high over the quarter. Market prices for corn averaged $6.92 per bushel, up 65% from a year ago, while soybean meal averaged $352 per ton, a 15.4% increase. Feed ingredient purchases, which represent the largest component of Pilgrim's cost of goods sold, were approximately $102 million higher during the quarter than the year-ago period. The corn market continues to demonstrate volatility, ranging from $6.17 to $7.65 per bushel during the third quarter. The company recognized $34 million in net mark-to-market gains related to changes in the fair value of its derivatives during the third quarter of 2011.
Lovette also discussed the supply indicators in the market, stating that although prices have yet to stabilize at profitable levels, egg sets, pullet placements and chicks placed all showed declines year over year. As cold storage levels also reflect a reduction for the year, the signals are in favor of stronger chicken pricing heading into 2012. He also reiterated the success that the company has had in moving away from 12 month fixed pricing scenarios.
For the first three quarters of fiscal 2011, Pilgrim's reported a net loss of $411.4 million, or $1.92 per share, on sales of $5.7 billion. This compares to net earnings of $45.3 million, or $0.21 per share for the comparable period in 2010.
Conference Call Information
Pilgrim's quarterly earnings call will be held today at 11:30 a.m. Eastern. Participants may join the conference live by telephone, by calling +1-877-875-0930, and requesting the "Pilgrim's Pride Conference." International callers should dial +1-412-902-6569. We encourage participants to join us for the live webcast by logging in via the internet at http://services.choruscall.com/links/ppc111028.html (Please copy and paste the link into the browser.) The live call and related slide presentation may also be accessed through the "Investors" section of our website at www.pilgrims.com.
The webcast will be available for replay within approximately two hours of the conclusion of the call. A toll-free telephone replay will be available that same day beginning at approximately 2:30 p.m. Eastern time by Those without internet access can listen to the replay through the close of business on November 11, 2011 by dialing +1-877-344-7529 from U.S. telephones, or at +1-412-317- 0088 for those calling internationally. The conference number is 10005093.
About Pilgrim's Pride
Pilgrim's employs approximately 40,500 people and operates chicken processing plants and prepared-foods facilities in 12 states, Puerto Rico and Mexico. The Company's primary distribution is through retailers and foodservice distributors. For more information, please visit http://www.pilgrims.com.