GREELEY, COLO. — Despite lower sales, Pilgrim’s Pride Corp.’s continued strategy of portfolio diversification, operational excellence and a focus on the customer helped minimize the impact of inflation and protein availability, as the company grew margins across all regions.
Based on its 2023 fiscal second quarter report for the period ended June 25, adjusted earnings per share were $0.44 with adjusted net income at $105.3 million, compared to $1.54 and $370.7 million, respectively, year-over-year. Adjusted EBITDA was $248.7 million, or a 5.8% margin, down 60% from a year ago.
Pilgrim’s efforts yielded net sales of $4.3 billion, down from $4.6 billion last year, equal to $0.26 per share on the common stock, which dropped from $642.6 million, or $1.51 per share, during the same period last year.
“Throughout the past 12 months, our US business experienced a period of significant volatility, during this time, our supply chain incurred dramatic increases in grain and elevated cost of production inputs, including utilities, labor, ingredients and packaging,” said Fabio Sandri, chief executive officer of Pilgrim’s, in a July 27 conference call with financial analysts to discuss second quarter results. “We also experienced extreme volatility in the commodity segment meat prices. Nonetheless, our diversification across both sizes, branded offerings and prepared items, combined with our key customer partnerships and focus on operational excellence help mitigate those challenges, helping us to capture the upside in the market, while protecting the downside.”
Pilgrim’s US was able to mitigate depressed commodity cutout values in its Big Bird segment as the company varied bird sizes in case-ready, branded products and prepared offerings.
Pilgrim’s increased the ready-to-cook production of chicken in the United States by 2.2% compared to the previous year.
“Production growth was supported by increased headcounts, and the industry continues to shift production away from the smaller bird segments into the heavier weight ranges, supporting a consistent year-over-year growth in average live weight,” Sandri said.
In the retail category, the company reported contraction of frozen items due to consumers shifting away from pantry stock.
However, the company expects a balance to return to the overall supply and demand for chicken. Wings and tenders led volume growth in the first quarter, but consumers are showing growing interest in breast meat this following quarter.
The company’s United Kingdom and Europe business are on track with Pilgrim’s planned growth trajectory, Sandri noted. Their branded offerings grew faster than the category average. As of now, Pilgrim’s plans to launch over 250 new products over the next six months.
After returning to historic margin levels in the first quarter, Pilgrim’s Mexico business saw improvement in live operations. By investing in housing and management procedures, the business is addressing potential biosecurity challenges and board mortality rates.
“Our focus on operational excellence and geographic diversification remains steady as our investments in the Yucatán Peninsula and our live operations to ensure domestic growth remain on course,” Sandri said.
Across all its businesses, Pilgrim’s is pushing for improved sustainability, whether through energy savings at production sites, overall emissions-reductions or innovative farming technology.
“As part of our leadership journey and sustainability, we recently completed an inventory of our global greenhouse emissions throughout the entire supply chain in conjunction with an independent third party,” Sandri said. “We have also implemented a series of programs and monitoring systems to evaluate our energy usage intensity, resulting in notable improvements across our production network.
“Our sustainability efforts beyond our production facilities also continue. In the UK, our pilot of energy self-sufficient poultry farm recently released its first commercial flock, we’ll continue to monitor our developments in all these areas and adjust accordingly to accelerate our progress.”