Pilgrim's Pride confident of better-than-expected 2005
more than it thought in the first fiscal quarter of 2005 because of
cheaper feed costs.
The US group announced that it is raising its previously issued earnings guidance for its first quarter of fiscal 2005 to a range of $0.68 to $0.73 per share versus the $0.50 to $0.60 per share range previously communicated by the company, due primarily to lower feed ingredient costs and stronger results in the company's prepared foods division than previously forecasted for the quarter.
The announcement highlights a change in fortune for the group, which was the supplier at the centre of animal abuse allegations last summer. The scandal, which centred around a video depicting horrific cruelty at one of the firm's plants, saw the company's shares fall by 10.4 per cent.
The group's earnings also tumbled from $9.8 million in the three months ended 3 July 2004 compared with $17.4 million a year earlier.
However, Pilgrim's Pride has made steady progress since then. The group reported record net income of $72.3 million for the fourth fiscal quarter ended 2 October 2004.and fourth quarter earnings were still a record at $57.5 million. This is fairly impressive given the challenges faced by the poultry industry in 2004, such as Avian influenza and increased energy prices.
The industry outlook for 2005 looks stable, if not spectacular. According to the US department of agriculture's Economic Research Service, broiler production could increase 3.1 per cent in 2005. If production does increase to that level, broiler output would be 35.125 billion pounds compared with 34.074 billion pounds this year.
Many poultry company executives however say that the industry's biggest challenge in 2005 will be regaining lost export markets, such as China.
Pilgrim's Pride is the second-largest poultry producer in the United States and Mexico following its purchase of ConAgra's non-core chicken business in November 2003 for $300 million in cash and 25.4 million shares.
That acquisition allowed Pilgrim's Pride's market share to rocket from 8.5 per cent to 16.3 per cent. The group currently employs more than 40,000 people.
