Pilgrim’s Pride sees major fall in income

Pilgrim's Pride expects growth in 2017 after mixed financial results

US poultry producer Pilgrim’s Pride saw its full-year income decline by nearly a third in 2016. 

The company’s net income in the 52 weeks to 25 December 2016 fell by 31% to $439m.

The business, a subsidiary of Brazilian meatpacker JBS, also saw a similar level of decline for its operating income, which dropped from $1.04bn in 2015, to $713m in 2016.

Fourth-quarter results, however, paint a different picture of performance for a company largely considered to be one of the US’ largest poultry producers. Year-on-year operating income for Q4 is 15%, rising from $107m in 2015, to $124.3m today.

Pilgrim’s Pride FY 2016 results – in focus

Net sales: $7.9bn
Pre-tax profit: $914m
Net income: $439m
Earnings per share: $1.73

Growth expected in 2017

While net sales may have declined slightly by 2.7% in the fourth quarter, Pilgrim’s Pride CEO Bill Lovette remained upbeat about Q4 and full-year trading results.

Our Fresh business continued to perform well in Q4, driven by our differentiated portfolio strategy of having a well-balanced mix of multiple bird sizes, geographical coverage, and strong relationships with key customers,” Lovette said in a statement.

Robust traffic at grocery retailers is driving strong demand for our products, a strong indication that chicken demand has remained healthy despite greater availability of other proteins.

We remain committed to our prepared foods operations and expect growth in 2017, with new capacity additions at Moorefield [West Virginia] to begin contributing to volumes starting in Q1.

Pilgrim’s Pride pumped $270m into capital expenditure over 2016 as the business moved to strengthen operational efficiencies. This came after Pilgrim's Pride reported in July 2016 that it would aim to diversify its operations after posting a second quarter sales decline.

In line with this commitment, Pilgrim's Pride completed the acquisition of GNP Company in an all-cash deal for $350m in January this year, axing 30 mid-level employees.

Pilgrim’s claim the folding-in of the branded chicken company with Pilgrim’s Pride is underway and expects positive results for 2017. The deal will help “broaden our geographical footprint and enhance our portfolio of on-trend value-added products”, Lovette added. 

Shares increased by 0.37% in after-hours trading as the company posted its full-year results.

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