Pilgrim’s Pride swings to profit in Q2

US-based meat processing company Pilgrim’s Pride swung to a profit of $69.4m in the second quarter ended 24 June 2012, compared with a year-earlier loss of $128.1m, due to reduced spending, a rebound in chicken prices and lower feed costs.

Sales grew 2.7% to $1.97bn and, so far this year, the company has been able to reduce its net debt by $248m to $1.18bn.

Pilgrim’s Pride lowered its selling, general and administrative expenses by 14% to $44.43m, while its administrative restructuring charges declined to $389,000 from $850,000 in 2011.

The firm did not have operational restructuring charges during the period; in 2011, it was affected by a charge of $2m.

Pilgrim’s chief executive officer Bill Lovette said that there will be challenging conditions in the industry in the second half of the year, due to volatility in the feed ingredient markets and sluggish consumer spending.

"Industry profits will continue to be influenced by chicken supply discipline, but volatility in feed ingredient costs will have an impact as well," Lovette added.

For the first half of 2012, the company’s net sales increased 1.26% to $3.86bn, while profit was $108m, up from a net loss of $254m in 2011.

The company recently signed an agreement to sell its commercial egg operations to Cal-Maine Foods, a US-based producer of fresh shell eggs, for an undisclosed amount.

The deal, which is expected to be completed in August 2012, includes two production facilities with a capacity for approximately 1.4 million laying hens and adjacent land located near Pittsburg, Texas.