Pilgrim's reported a 15.3 percent increase in operating income for the fourth quarter of fiscal year 2016.
The company released its quarterly and year-end results on February 8.
The operating income reported for the quarter was at $124.3 million, compared to an operating income of $107.8 million during the same period of fiscal year 2015. For the year, the company’s operating income was down 31.7 percent, dropping from $1.04 billion to $713.5 million.
Pilgrim’s net sales for the quarter dropped 2.7 percent to $1.91 billion, while the net sales for the year were reported at $7.93 billion, a 3 percent decline.
Other quarterly highlights include a net income of $70.6 million, an adjusted EBITDA of $172.2 million, and cash flow from operations of $224.4 million.
2016 highlights
Highlights for the fiscal year, according to a press release, include:
- The investment of $270 million in capital expenditures on operations, including strategic projects on product mix changes to reduce impact of commodity markets, strengthen operational efficiencies as well as tailored customer needs, and improve margin profile.
- Small and case-ready birds continued to deliver strong performance, on favorable market conditions, despite greater availability of other proteins.
- The company’s acquisition of the GNP Company was completed with integration and synergy capture procedures well underway
- The successful launch of premium, Pilgrim's-branded value-added products in Mexico, complementing the existing popular Del Dia range of products and providing improved coverage of all consumer market segments.
Executive commentary
"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. 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 to begin contributing to volumes starting in Q1," stated Bill Lovette, chief executive officer of Pilgrim's.
"We continue to invest in facility improvements and diversify our portfolio by improving mix and offer more differentiated, innovative products to serve key customer requirements, reduce the impact of commodity markets, and further raise our margin profile. Reflecting our commitment to spend cash flows on strong ROI projects, we spent a total of $270 million on capex in 2016, higher than our depreciation and a record for our company; including strategic projects which will strengthen our operational efficiencies and tailored customer needs to improve competitive advantages for us.
"Signifying our commitment to generate shareholder value by optimizing capital structure while pursuing our growth strategy, above all investments in our operations, we paid a total of $2.2 billion in special dividends over the past two years, repurchased over $200 million in shares, successfully integrated our Mexican acquisition and acquired the GNP Company to broaden our geographical footprint and enhance our portfolio of on-trend value-added products."
