GREELEY, COLO. – Pilgrim’s Pride Corp., a U.S.-based subsidiary of Brazil’s JBS SA, posted higher net sales and income during its fiscal third quarter. The improvement was attributable in part to increased sales in the United States and Mexico and continued positive demand for value-added, non-commodity chicken from the retail and quick-service-restaurant segments.
Net income attributable to Pilgrim’s Pride in the third quarter ended Sept. 29 totaled $109,765,000, equal to 44c per share on the common stock, up 274% from $29,310,000, or 12c per share, in the same period a year ago. Net sales increased 3% to $2,777,970,000 from $2,697,604,000.
“After a challenging Q3 2018 within the U.S. pure commodity market, conditions during Q3 of this year were much improved,” said Jayson Penn, chief executive officer.
Operating income in the quarter spiked by more than 120% to $188,185,000, which compared with $85,346,000 in the same quarter in 2018. Net sales derived from operations in the United States and Mexico both increased for the quarter and for the year while sales in Europe lagged.
In the United States, net sales of $1,931,656,000 in the third quarter exceeded the previous year’s sales of $1,864,169,000 by 4%. U.S. sales for the first three quarters this year were $5,732,201,000, up 2% from $5,604,709,000 in the same period a year ago.
“The environment in non-commodity chicken was in-line with seasonality and remained strong, driven by demand from retailers and Q.S.R.s,” Mr. Penn said, adding that the company remains committed to its Key Customer strategy while continuing to innovate in all its business segments. “We are investing to further differentiate our portfolio and increase our capacities and capabilities to meet customer expectations. We expect value-added, differentiated products to account for a significantly larger portion of our total results over the next few years as we continue to reduce our mix of more volatile commodity sales and improve our margin profile.”
In Mexico, sales increased by 7% in the third quarter of fiscal 2019 to $328,782,000, which compared with $306,713,000 in the same period a year ago. Year-to-date, sales in Mexico totale $1,045,133,000, up from $1,042,161,000 a year ago.
“Mexico was in-line with normal seasonality and significantly better than last year,” Mr. Penn said. “We expect to generate improved performance for the remainder of 2019 as demand continues to grow. Our Prepared Foods have continued to increase at a double-digit rate and are generating great results under both premium Pilgrim’s and Del Dia brands to drive the evolution of our Mexican portfolio toward more differentiated, higher-value products and margin expansion.”
Meanwhile, in Europe, sales in the third quarter of this year lagged by about 2%, at $517,532,000 compared with $526,722,000 in the third quarter of 2018. For the year, European sales in 2019 totaled $1,568,396,000, down nearly 4% from $1,634,125,000 in the same period a year ago.
“Our European operations have continued to make progress in mitigating input cost challenges and are already generating better results throughout Q3,” Mr. Penn said. “Despite seasonally cooler weather, improvements in operational efficiencies, and better integration of input costs into customer pricing models drove the improvement in performance. We expect a continuation of the momentum into Q4.”
This past August, Pilgrim’s announced the acquisition of Tulip Ltd., a pork company based in the United Kingdom, for approximately $354 million. Pilgrim’s expects the addition of Tulip to its portfolio to bolster its status across the world, in both the poultry and pork segments.
“The addition of the Tulip team further enhances our position as a leading global player by expanding our portfolio of prepared foods and brands while strengthening our leadership position in the U.K. market,” Mr. Penn said. “It aligns with our strategic priorities as we continue growing our geographical footprint and extending our global reach into attractive new markets.”