Pilgrim's Pride
Blames Quarterly Loss on Price of Grain
By EMILY FREDRIX
Associated Press via RedOrbit
Posted on: Wednesday, 30 July 2008, 18:00 CDT
But its shares surged because the loss was smaller than
expected.
The Pittsburg, Texas-based company's loss amounted to 75
cents per share compared with a profit of $62.6 million, or 94 cents per share
a year earlier. Excluding discontinued operations, the company says it lost 69
cents per share.
Revenue rose 5 percent to $2.21 billion from $2.10 billion
in the quarter.
Thomson Financial said analysts expected a loss of $1.19 per
share on revenue of $2.14 billion.
Shares climbed $1.96, or 16 percent, to $14.13 in midday
trading. A day earlier, Pilgrim's Pride shares lost 9.5 percent after rival
meat producer Tyson Foods Inc. saw its quarterly profit plunge 90 percent.
Tyson, like Pilgrim's Pride, also attributed its loss to the record-high prices
for grain.
Grains like soybeans and corn, which have skyrocketed in
price over the past year, are a key ingredient in animal feed. And the company
says prices charged to consumers aren't rising fast enough because there's too
much chicken on the market to sustain higher prices. The company has been
making production cutbacks, but says prices are still too low.
"Simply put, there's still too much breast meat
available to drive market pricing significantly higher," Clint Rivers,
president and chief executive officer, said in a conference call.
Pilgrim's Pride said its total feed-ingredient costs in the
quarter rose 41 percent, or $266 million, compared to the year-ago period. It
estimates its total feed-ingredient costs for the year will be $900 million
more than last year.
As input costs rise, the retail price for boneless chicken
has fallen because of an oversupply. Market breast prices now average about
$1.33 per pound, Rivers said. Market prices should be at least $2.15 for the
industry to break even, he said, and the company would like to see chicken sell
for a dime more a pound to turn a profit.
To force chicken prices higher, Pilgrim's Pride will have
cut 5 percent of its production by the end of this year. Total pounds were down
1.33 percent in the third quarter, and they're expected to be down 8.7 percent
in the fourth quarter.
Originally published by THE ASSOCIATED
PRESS.
Source:
redorbit.com