Pilgrim’s net sales up, net income down in third quarter

Pilgrim’s Pride saw its net sales increase on a year-over-year basis for the third quarter, but a decline in net income, the company reported.

The financial results for the quarter, which ended on September 27, were announced in a press release, issued on October 28.

The company reported a net income of $33.7 million for the quarter, down from the $110.1 million from the third quarter of 2019.

Meanwhile, the company’s net sales jumped from $2.78 billion in the third quarter of 2019 to $3.08 billion during the most recent quarter. Broken down geographically, the biggest gains in sales were seen in Pilgrim’s European operations, which saw net sales of $845.7 million, up from the $517.5 million one year ago. Sales in Mexico rose from $328.8 million to $335.2 million, while U.S. sales slid from $1.93 billion to $1.89 billion.

Fabio Sandri, president, chief executive officer and financial officer of Pilgrim’s Pride, said he was pleased with the performance during the quarter as the company continues to mitigate COVID-19-related challenges in all of the markets it serves.

“Once again we are grateful to our team for their continued commitment, dedication and hard work, in supporting our ability to keep our team members safe and healthy, and allowing us the capability to maintain production and supply to our customers during this unprecedented crisis,” Sandri said in the press release.

“Although conditions have been improving, the markets have remained volatile and challenging in Q3 as a result of COVID-19. However, our diversified strategy has continued to mitigate the tough environment and produce the expected results in relative performance to industry competition, and deliver more resilient performance regardless of changes in specific market conditions. For Q3, the U.S. and Mexico rebounded from a difficult first half, with Mexico recording one of the strongest Q3 in its history, while Europe also continuing to improve despite the increase in operating costs related to COVID-19. We remain agile and are continuing to adapt our operations to changes in market conditions.”

U.S. operations

During the third quarter in the United States, Pilgrim’s Pride continued to see to see demand recovering at its fresh operations, including from some sectors within foodservice, with more states gradually loosening travel and movement restrictions, Sandri said.

The company reported that retail and quick service restaurant (QSR) businesses have been especially strong, and demand from Pilgrim’s customers has been outperforming the industry. Commodity large bird deboning was challenged the third quarter.

Operationally however, Pilgrim’s continued to improve its relative performance versus the industry across all business units, including commodity segments. Sandri said the company also continues to adapt quickly to changes in channel demand by adjusting the mix of the company’s production capabilities, supported by its close partnerships with key customers, strong focus in execution by Pilgrim’s team members, the geographical diversity of the company’s footprint, and Pilgrim’s presence across all bird size categories.

Mexico operations

“After a very difficult first half in 2020, our Mexican operations delivered great results in Q3, and we generated one of the strongest Q3 in the company's history in Mexico, despite the unfavorable mix impact and added operating costs relative to the same period last year,” Sandri said.

A normalization in economic activities, an improved supply/demand balance in the market, a stronger peso, and a very good operational performance, all contributed to the strength in Mexico during the quarter. The company continues to invest in its

Del Dia and premium Pilgrim’s brands (both prepared and fresh), as well as seeking more market share in the modern channel, which Sandri said will bring more stable margins to the company’s operations.

Operations in Europe

“Our legacy European chicken operations are continuing to improve, driven by exposure to retail as well as a recovery in foodservice demand, particularly from QSR, despite the significant impact of COVID-19 on the operations. In addition, our strong internal operating performance and commitment to innovation have helped in mitigating the difficult environment,” said Sandri.

“The positive momentum in improvement from the newly acquired European pork assets has been maintained, with positive EBITDA and margins continuing to increase. The performance was driven by strong demand at retail partially offset by a reduction in foodservice, continuing strength in pork exports especially to China, as well as the implementations of operational improvements and synergy capture.”