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Pilgrim's Pride Corporation Posted $ 32 million losses in Q2’06
posted by admin on 09/05/06
The US second-largest chicken producer cited reduced export demand as the prime cause.
PITTSBURG, Texas, May 2 /PRNewswire-FirstCall/ -- Pilgrim's Pride Corporation reported a net loss of $32.0 million, or $0.48 per share, on total sales of $1.27 billion for the second quarter ended April 1, 2006. For the second quarter of fiscal 2005, the Company reported net earnings of $56.4 million, or $0.85 per share, on total sales of $1.38 billion.
"Our second-quarter results reflect a challenging operating environment for U.S. poultry companies," said O.B. Goolsby, Jr., Pilgrim's Pride president and chief executive officer. "The spread of H5N1 avian influenza in parts of Europe and Asia has significantly reduced export demand, leading to higher inventory levels and contributing to lower overall market pricing. At the same time, industry production levels have continued to increase, creating an oversupply situation and further weakening prices."
Mr. Goolsby said that in the Company's U.S. operations during the second quarter, market pricing for both breast meat and leg quarters declined approximately 30% from a year ago levels. Additionally, U.S. chicken sales volumes declined approximately 4% because of lower demand versus a year ago due primarily to the effects of avian influenza concerns in the international markets.
In response to the current operating environment, Pilgrim's Pride has initiated a multi-point plan designed to improve the Company's competitive position.
The plan includes:
* A reduction in the weekly slaughter rate of approximately 3%, which is equivalent to approximately 830,000 head per week. * A $25-$40 million reduction in capital investment for fiscal 2006. The Company's revised estimate for capital investment this year is $140-$175 million.
* A sharpened focus on cost reductions and improved efficiencies. "We believe that by taking these actions at a time of the year when chicken consumption normally increases, we will better balance our production with demand for the remainder of the year and strengthen our competitive position. Reducing overall supply to better match demand is an important component in helping return the industry to profitability. While the short- term operating environment remains challenging, we are confident that continued long-term growth in demand for high-quality, convenient and low-fat meat proteins will position our Company for a return to profitable growth when conditions in the chicken markets begin to improve," Mr. Goolsby said.
For the six months ended April 1, 2006, the Company reported a net loss of $6.3 million, or $0.09 per share, on total sales of $2.61 billion. For the first six months of fiscal 2005, Pilgrim's Pride reported net earnings of $104.9 million, or $1.58 per share, on sales of $2.74 billion.
Pilgrim's Pride Corporation is the second-largest chicken producer in the United States and Mexico and the largest chicken producer in Puerto Rico. Pilgrim's Pride employs approximately 40,000 people and has major operations in Texas, Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee, Virginia, West Virginia, Mexico and Puerto Rico, with other facilities in Arizona, Florida, Iowa, Mississippi and Utah.
Pilgrim's Pride products are sold to foodservice, retail and frozen entree customers. The Company's primary distribution is through retailers, foodservice distributors and restaurants throughout the United States and Puerto Rico and in the Northern and Central regions of Mexico.
Source : PR Newswire
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