Food

Volatile global poultry market weighs on Pilgrim’s profit | 2021-02-12

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GREELEY, COLO. — Ongoing unpredictability in the global poultry market led earnings lower at Pilgrim’s Pride Corp. in fiscal 2020.

Net income in the year ended Dec. 27, 2020, totaled $94.76 million, equal to 39¢ per share on the common stock, down 79% from $455.92 million, or $1.83 per share, in fiscal 2019. Net sales for the year were $12.01 billion, up from $11.41 billion in the prior year.

 “While overall global economic and chicken market conditions were very volatile and challenging during 2020 as a result of COVID-19, our team members have continued to deliver on our strategy, achieving an increase in relative performance compared to the year before and to our industry competition,” said Fabio Sandri, chief executive officer. “Our diverse global footprint has contributed to the well-balanced and resilient performance against different specific market conditions.”

In the fourth quarter, net income totaled $79,000, down sharply from $92.08 million. Last year’s results included a gain of $56.88 million on a bargain purchase. Net sales in the quarter were $3.1 billion, up 1.8% from $3.06 billion in the same period a year ago.

“In Q4, our operating performance in the US has continued to be resilient, driven by our partnerships with key customers and the relentless focus on executing and delivering the best results possible despite the volatility and changes in market conditions,” Mr. Sandri said. “Within our case-ready and small bird businesses, strong key customer demand from QSR and retail customers, has continued to remain strong. While the commodity sector has continued to be challenging, we are continuing to improve our operating efficiency in that business. Our US prepared foods continues to evolve in anticipation of even stronger results in 2021, reflecting the investments made over the last few years.”

Mr. Sandri also said Pilgrim’s continues to invest in future innovations to meet customer needs.

“We expect value added, specialty products to account for a meaningfully larger portion of our total results over the next few years as we continue to de-emphasize the mix of more volatile commodity sales and strengthen our margin profile,” he said.

In Mexico, sales increased by around 14% in the fourth quarter, to $392 million compared with $343 million during the same time period in 2019. For this year, net sales in Mexico were $1.32 billion, which compared with $1.39 billion in 2019.

“After a very challenging first half during 2020, our Mexican operations have continued to rebound strongly and deliver great results in the second half including Q4 to finish the year in-line with prior years,” Mr. Sandri said “We adapted the operations well to generate strong performance despite volumes that were slightly lower than the same period in 2019 but higher than Q3. More normalized economic activities, continued good supply/demand balance in the market, our increased share of non-commodity products, fewer imported chicken, and a very good operational performance, all contributed to the strength.”

In Europe, sales in the fourth quarter of fiscal 2020 increased by about 4%, at $849.2 million, which compared with $815.4 million in the fourth quarter of 2019. For the year, European sales in 2020 were up by more than 27%, at $3.27 billion, which compared with $2.38 billion during the same period last year.

“For the full year, our legacy European operations produced an EBITDA that was 6% higher than the previous year, reflecting the strength and consistency of our business model despite the significant hit of COVID-19 to our business profitability,” Mr. Sandri said. “We expect to continue an improvement in results driven by increased operational efficiencies, investments in automation, focus on higher yields, and better mitigation of input costs. The performance of our newly acquired European operations has continued to improve with EBITDA on a positive momentum.”

About thomas@themercen.com

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