Yahoo Finance Cheaper Chicken Gives Pilgrim’s a Boost as Demand Rebounds
(Bloomberg) -- Pilgrim’s Pride Corp., one of world’s largest poultry producers, is getting a boost from lower grain costs and rising demand for chicken in the US, posting earnings that beat expectations.
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The company, controlled by Brazilian powerhouse JBS SA, reported adjusted earnings of 77 cents a share in the three months ended March 31, according to a statement on Wednesday. That compares with the 69 cent average of analyst estimates compiled by Bloomberg.
Chicken producers have recently benefited from cheaper feed and tighter inventories as demand improves. Consumers are still seeking alternatives to higher beef prices, giving a boost to an industry that saw profits sink last year because of a supply glut.
“Our US portfolio continues to demonstrate an ability to capture market upsides while minimizing downside risk through a diversified set of offerings across multiple bird sizes and value-added items,” said Chief Executive Officer Fabio Sandri. “Although we experienced depressed market conditions and persistent consumer inflation throughout 2023, we saw this as opportunity to enhance our competitive advantage.”
The improved conditions have boded particularly well for Pilgrim’s, which has little exposure to other proteins. Shares of the company have surged 28% this year — the most among main global rivals — to the highest level since 2017. The producer’s earnings have now improved for five straight quarters.
Prices for corn and soybean meal — the two main ingredients in animal feed — have tumbled from the levels seen in early 2023, slashing the costs of raising birds. Meanwhile, average domestic prices for boneless and skinless chicken breast jumped almost 5% from a year earlier in the first quarter, with tenderloins and whole wings surging 29% and 83%, respectively, according to the US Department of Agriculture.
Pilgrim’s said its business that produces big birds benefited from “enhanced operational efficiencies and market fundamentals.” Gross profit in the US rose sixfold from a year earlier to $237.2 million, with more modest increases seen in Europe and Mexico.
Sales of case ready cuts and small birds continued to grow, with more promotions luring consumers, the company said.
(Updates with details throughout.)
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