Pilgrim’s Pride net sales drop in third quarter

By Aidan Fortune

- Last updated on GMT

Bill Lovette of Pilgrim's Pride said the business plans to grow its operations in Mexico
Bill Lovette of Pilgrim's Pride said the business plans to grow its operations in Mexico

Related tags Net sales Revenue Poultry

US poultry processor Pilgrim’s Pride has posted a 3.8% loss in net sales for the third quarter of the year.

In the 13 weeks to 25 September, net sales dropped from $2.1bn in the same period of 2015 to $2.03bn. Its net income also fell from $137m in 2015 to $98m.

Despite the drop in sales and income, Bill Lovette, chief executive officer of Pilgrim’s​, remained upbeat about the results, citing competition of other proteins as the business’ key concern.

During Q3, our fresh business continued to perform well driven by our differentiated portfolio strategy of having presence in all three bird sizes and strong relationships with key customers,​” he said. “Retail demand for our birds remained robust despite concerns about greater availability of other competing proteins. 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 also gave an update on extension plans. “The conversion of our 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. Additionally, we are starting work on converting one of our case-ready plants to produce ABF, veg-fed chicken.

Pilgrim’s seeking new revenue streams

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.​”

He hopes these expansion plans will help stabilise the business. “Furthermore, these investments 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 praised its Mexican operation for retaining profitability.

Market environment in Mexico during Q3 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 unfavorable 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.

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.​”

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