PITTSBURG, Texas – Pilgrim's Pride Corp. (PLG), the second-largest poultry producer in the United States and Mexico, said Tuesday its first-quarter earnings will fall more than 50 percent short of its prior expectations. The company's stock plunged to a new 52-week low after the news.
The Pittsburg, Texas-based poultry producer also said it was withdrawing its earnings outlook for the full fiscal 2006 and will cut about 300 jobs at a Pennsylvania plant.
Shares of the company fell $6.01, or 18 percent, to $27.15 in early trading on the New York Stock Exchange. The stock has traded in a 52-week range between $28.84 and $40.23.
The company blamed worse-than-expected performance by its operations in Mexico and lower prices received on chicken leg quarters in its U.S. operations.
"We are extremely disappointed with the results realized this quarter by our Mexico operations," said O.B. Goolsby, Pilgrim's Pride president and chief executive officer, in a prepared statement.
Goolsby also blamed public fears over avian flu for reduced demand and "disruptions caused by having to reroute product in transit to locations other than those intended as these concerns materialized."
The statement said the company will slash its first-quarter earnings estimate to a range of 36 cents to 41 cents per share, excluding one-time charges and tax benefits. Originally, Pilgrim's Pride had projected first-quarter earnings ranging from 75 cents to 85 cents per share.
Pilgrim's Pride has not yet revised its full-year earnings guidance, but it planned to do so when it releases its first-quarter 2006 financial statement on Jan. 23, according to the company statement Tuesday.
After a record performance last fiscal year, the Mexican operation's holiday season performance fell short of expectations and the previous year's performance, Goolsby said.
In the United States, Goolsby said the selling price for chicken leg quarters fell from an average of 45 cents per pound in the fourth quarter of fiscal 2005 to 29 cents per pound in the first three months of fiscal 2006.
The company also announced it will cut about 300 workers from its turkey-processing operations in Pennsylvania.
According to the company statement, a Franconia, Pa., plant will cease ground-turkey and cooked-turkey cold-cut production and focus on refrigerated salads. Pilgrim's Pride will limit turkey operations to fresh and frozen whole turkey processing at its New Oxford, Pa., plant.
The company expected the restructured turkey operations to cut labor costs at the Franconia plant by about $13 million and improve pretax earnings by $10 million to $15 million per year.