Pilgrim’s Says Poultry Market Is Turning Up After Surprise Loss

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Pilgrim’s Pride Corp., the second-biggest U.S. chicken producer, said that poultry markets improved in June, a promising sign for recovery after the company posted a surprise loss for the second quarter and revenue results that missed analyst estimates.

The company posted a loss of 2 cents a share, not adjusted. Analysts were expecting a profit of 1 cent per share, a statement Wednesday showed. The period was the first to show the full impact of the coronavirus pandemic on results.

In the U.S., the market was significantly challenged in the first half of the quarter before a gradual loosening of travel and movement restrictions drove an improvement in demand, especially from food service, the company said.

“After a very challenging beginning of the quarter, markets have adapted. During the month of June, results were quite encouraging and showing a noticeable improvement globally,” Fabio Sandri, interim chief executive officer for Pilgrim’s, said in the statement.

“Compared to June of last year, the U.S. was roughly the same, Europe slightly better and Mexico in-line, even when considering all the disruptions, less than optimal product mix, and added operating costs because of Covid-19,” he said.

Key Insights

  • In the U.S., large bird deboning was once again the most volatile this quarter, with quick moves between the lows and the highs, and remained challenging compared to 2019.
  • The company didn’t address an antitrust investigation by the U.S. Justice Department into price-fixing allegations.
    • Jayson Penn, the company’s CEO currently on a leave of absence, was charged by U.S. prosecutors with conspiring to fix prices.
    • The paid leave started last month, and Chief Financial Officer Fabio Sandri is acting as interim CEO.
  • Europe operations performed in-line with last year, driven by strong retail demand.
  • Operations in Mexico continue to struggle amid an unfavorable macroeconomic environment, while local currency moves also put additional pressure on results.

Market Reaction

  • Pilgrim’s, down about 50% this year, fell about 3% in after-market trading on Wednesday.

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