Pilgrim’s Pride net income up 60% in Q2 2019

Pilgrim’s Pride saw its net income rose 60% to $170.1 million for the second quarter of fiscal year 2019, the company announced on July 31. Meanwhile the company’s net sales rose a mere 0.02% to $2.84 billion on a year-over-year basis.

The quarter ended on June 30.

“After a very challenging market in Q2 of last year, we experienced a much better environment in the U.S. during Q2 2019, particularly in commodity large bird deboning, while feature activities at retailers and QSRs returned to seasonal levels. Large-bird cutout tracked much closer to the five-year average, driven by strengths in wings, leg quarters, and tenders,” Pilgrim’s CEO Jayson Penn stated in a press release.

“We remain committed to our key customer strategy, which is relevant to our growth. Revenues from key customers have more than doubled over the last eight years, reducing our relative dependency on pure commodity sales and reducing volatility.”

Performance in Mexico

In terms of net sales, Pilgrim’s saw the biggest increase in its Mexican operations. Net sales rose from US$374.2 million to US$390.2 million. Its operating income in Mexico was US$68.4 million, up from the US$62 million from the same period of fiscal year 2018.

“Conditions in Mexico significantly rebounded from a counter-seasonally weak Q1. A return to much more normal growing conditions together with strong demand drove a very positive price reaction throughout the quarter. The availability of imported pork from the U.S. has also significantly diminished, and presented much less competition to demand for chicken. Our Prepared Foods have continued to grow at a double-digit rate and are generating great results under both premium Pilgrim’s and Del Dia brands to drive the evolution of our Mexican portfolio towards more differentiated, higher-value products and margin expansion,” said Penn.

Performance in Europe

Pilgrim’s Pride’s net sales in Europe declined in the second quarter from US$563.1 million to US$535.9 million. European operating income, meanwhile, saw an increase from US$23.7 million to US$24.2 million.

Moy Park is Pilgrim’s European subsidiary.

“Our European operations have started to overcome recent input cost challenges and generated improving results throughout Q2. While pressure from wheat prices has been reduced, increased implementation of our key customer strategy also enabled us to better reflect input cost increases by adjusting our pricing models compared to before. Along with additional improvements in operational efficiencies, we exited Q2 with a stronger EBIT performance than when we began, and we expect this momentum to continue into the second half of the year,” Penn said.

Priorities going forward

Penn noted that Pilgrim’s Pride will continue investing to further differentiate the company’s portfolio, and increase its capacities and capabilities to meet customer expectations.

“We expect value added, differentiated products to account for a significantly larger portion of our total results over the next few years as we continue to reduce the volatility of our commodity sales mix,” Penn said.