Seaboard reports $7 million loss on Butterball in Q1

Seaboard Foods continues to experience net losses on its investment in Butterball, but those losses were not as severe as they were one year ago.

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shcherbak volodymyr, istock
shcherbak volodymyr, istock

Seaboard Foods continues to experience losses on its investment in Butterball, but those losses were not as severe as they were one year ago.

Seaboard, which owns a 50% non-controlling stake in Butterball, the largest turkey company in the United States, reported a loss of about $7 million for its Butterball investment during the first quarter of fiscal year 2020, which was an improvement from the $11 million loss experienced a year ago. The quarter ended on March 28.

According to the Form 10-Q, which Seaboard filed with the U.S. Securities and Exchange Commission (SEC) on April 27, the turkey segment’s decrease in loss can be attributed primarily to “higher prices for turkey products sold due to a strong sales mix with more value-added products, partially offset by higher production costs.”

Among the value-added Butterball products launched during the first quarter were its Premium Snacks line, which included:

  • Thanksgiving seasoned turkey breast with stuffing bites and dried cranberries
  • Citrus teriyaki seasoned turkey breast with sesame sticks and dried pineapple pieces
  • Cajun seasoned turkey breast with cornbread crisps and dried apple pieces

Potential impact of COVID-19

While Seaboard Foods made no mention of how the COVID-19 pandemic might have affected Butterball’s performance during the first quarter, it indicated it could have an adverse impact on operations for the second quarter, which is underway.

“Based on market conditions and impacts of the COVID-19 pandemic, management currently cannot predict if this segment will be profitable for the remainder of 2020,” the company said in its Form 10-Q, adding that if a plant were to temporarily close during the quarter, it would likely be negatively affected.

Those assessments also applied for Seaboard’s greater operations, which also include the company’s pork, commodity trading and milling, marine, sugar and alcohol and power segments.

“Pressures on certain production and supply chains have been tightening and, in many countries, governments are prioritizing domestic markets over exports. Seaboard’s first quarter results of operations are not necessarily indicative of results to be expected foer the remainder of 2020 or the full year. While Seaboard expects the effects of the pandemic to negatively impact its results on operations temporarily, the future extent is not known. The extend of the impact will depend on future developments, including actions taken to contain the pandemic.

To date, no Butterball plants were reported to have experienced a temporary closure. However, an estimated 52 workers at its plant in Mount Olive, North Carolina, had tested positive for COVID-19 as of April 28.

View our continuing coverage of the coronavirus/COVID-19 pandemic.

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