CHICAGO – Pilgrim's Pride Corp. (PPC), the No. 2 U.S. poultry producer, on Monday said earnings increased nearly fivefold in its fiscal first quarter on strong chicken sales, cheaper feed and an acquisition.
The results beat Wall Street's average forecast and matched the high end of the company's estimates.
Earnings for the quarter ended Jan. 1 were $48.5 million, or 73 cents per share, compared with $10.3 million, or 20 cents a share, during the year-ago period.
Wall Street analysts on average expected 71 cents per share, according to Reuters Estimates. The company earlier this month had estimated 68 to 73 cents per share.
Sales for the period were $1.37 billion, compared with $1.04 billion a year ago.
Pilgrim's Pride Chief Executive O.B. Goolsby attributed the results to that purchase and to strong performances in its prepared food, fresh chicken and food service businesses, as well as to lower feed costs and better exports.
"The outlook for sustained profitability in our chicken business is encouraging. We anticipate further growth in our chicken business as we respond to favorable consumer trends and demand for high-quality, convenient, meat proteins," Goolsby said in a statement.
Chicken has benefited from of its low price relative to other meats, analysts said.
"Competing beef prices are so high, so when consumers are looking for value out there, chicken continues to be a good value," said Todd Duvick, a Banc of America research analyst.
Chicken companies should be helped by exports as overseas buyers relax bans on U.S. poultry. The bans were placed after avian flu was reported in some states in 2004. China, a leading export market, lifted its ban earlier this month.
The Department of Agriculture (search) estimates domestic chicken consumption in 2005 will be up 3 percent from 2004 and exports will be up 7.5 percent.
Record large U.S. corn and soybean crops in 2004 have provided chicken companies with an abundance of low-cost feed. Feed is about half the cost of producing chickens.
Corn and soybean meal, the two major feeds, cost about $40 per ton less than a year ago, said Paul Aho, an economist with Poultry Perspective, an industry consulting firm.
"They are really happy with the low feed prices right now," Aho said.