Pilgrim’s Pride Corporation on August 1 reported its financial results for the second quarter of fiscal year 2018.
The quarter ended on July 1.
Second quarter highlights
- Net sales of $2.84 billion, up 3.1 percent versus the same quarter of FY 2017 (up 26.0 percent if excluding the Moy Park numbers from last year). Net income of $106.5 million.
- Adjusted operating income of $212.4 million (or a 7.5 percent margin), excluding the impact of grain derivative loss and one-time expense. Adjusted operating Income margins of 6.5 percent in U.S., 16.6 percent in Mexico and 4.8 percent in Europe operations, respectively.
- Adjusted EBITDA of $282.5 million (or a 10.0 percent margin) and adjusted EPS of $0.53.
- Portfolio strategy along with history of acquisitions and investments, with the company's international operations now accounting for about 30 percent of sales. The increased diversification and addition of differentiated products with the key customer approach has continued to generate growth while moderating margin compression in any specific market.
- Mexican operations continue to deliver solid results with EBITDA margins of 19.6 percent, driven by strong operating performance and growing demand for chicken. Investments into premium Pilgrim’s brand is gaining momentum and producing great results.
- New U.S. credit facility was substantially oversubscribed and received strong support from lending partners with favorable terms for future benefits, solidifying our capital structure to pursue strategic intent.
Executive commentary
“During Q2 market conditions within our U.S. operations were mixed, with the commodity segment counter seasonal and weak whereas the less commodity businesses continued to be strong and well balanced. Despite some volatility in feed and less than ideal market conditions in the commodity chicken sector, the investments we made over the past few years, the recent acquisitions and our capture of operational improvements, and the strength of our small bird and case-ready businesses helped us to offset some of the impact from the commodity markets and contribute to the evolution of our portfolio in supporting our vision to become the best and most respected company in our industry,” stated Bill Lovette, Chief Executive Officer of Pilgrim's.
“Mexico once again delivered strong results during the quarter as we had strong operating performance as well as very good demand for chicken. Our volumes increased during the quarter, driving a robust EBITDA performance of 19.6% which together with our differentiated strategy and dedication of our team members, extended the outperformance over the main competition over the past few years. Our Prepared Foods are growing at a double digit rate and are generating strong results under both premium Pilgrim’s and Del Dia to drive the evolution of our Mexican portfolio towards more differentiated, higher-value products, and ultimately margin expansion.”
“In Europe, we are already recording an improvement in performance and are seeing expected results from the integration, with significant share gained at a key customer and several other projects to further optimize our relationships, highlighting how our newly acquired operations are already benefiting from our team’s enhanced focus on Key Customer strategy. The operational improvements initiatives are also going well and we are slightly ahead of our $50 million synergy target for the next two years, supporting a margin increase of 70bps. We are innovating in the market in Europe by continuing to develop exciting products to satisfy a growing consumer demand for chicken and alternative forms of protein, which can be easily adapted to other markets we participate in.”
