Pilgrim's Pride benefits in Q1 from acquisitions, chicken demand
Pilgrim's Pride reported first-quarter consolidated net sales of $2.75 billion, up 10.8% from the year-ago period, according to a company release. U.S. sales made up $1.8 billion of the total. Net income jumped 27.1% to $119.4 million compared to $93.9 million for the first quarter of 2017.
Last fall's acquisition of Moy Park, a Northern Ireland poultry producer, is already generating value. Pilgrim's Pride's Mexican operations also did well during the first quarter despite disruptions from natural events, the company said. In addition, prepared foods and diversification in the premium Pilgrim's and Del Dia brands are showing strong results.
"Despite some headwinds in feed, labor and logistics, the investments we made over the past few years, together with the recent acquisitions and our capture of operational improvements, helped us to generate consistent results and continued to contribute to the evolution of our portfolio in supporting our vision to become the best and most respected company in our industry," Bill Lovette, Pilgrim's president and CEO, said in a release.
While demand for chicken and other proteins shows no sign of abating, it hasn't been enough to buffer meat and poultry suppliers from outside challenges. Similar to Tyson Foods, Pilgrim's Pride is experiencing rising feed, labor and logistics costs. These operational expenses, along with driver shortages, have weighed on profits for poultry processors and other food manufacturers.
One bright spot is that near-term demand looks positive for the poultry industry. According to the U.S. Agriculture Department, U.S. consumers are expected to consume 109.2 pounds of poultry per capita this year from 108.6 pounds a year earlier.
Poultry prices aren't always keeping pace with demand, though. Lovette noted that prices for big bird deboning, or white meat production, during the first half of the quarter stayed unseasonably low, but they have since recovered and remain closer to normal levels.
As Pilgrim's Pride indicated last year, it's keeping its focus on acquisitions and brand positioning in order to drive global expansion, achieve consistent, high-quality production and increase sales.
Pilgrim's Pride last fall spent $1.03 billion to purchase Moy Park from its Brazilian parent company JBS, giving it access to the U.K. and European market. A year earlier, it bought GNP Company, a Midwest-based premium branded chicken provider, helping expand its antibiotic-free and organic lines. It appears Pilgrim's Pride is focusing its M&A attention on bulking up in other regions and in products coveted by consumers. For now, it appears to be a sound strategy that allows Pilgrim's Pride to focus on what it does best.