Dive Brief:
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Pilgrim’s Pride is expecting a rebound in chicken sales as constrained red meat supplies give poultry an affordable edge with consumers, according to an earnings call Thursday.
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Adjusted earnings were 44 cents per share, the company reported Wednesday, higher than analysts expected despite significant profit declines. Second quarter net income plummeted 83% to $60.5 million from $362.1 million last year.
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Lower poultry prices could benefit the company in the future as inflation-wary consumers shy away from pricier beef and pork, Pilgrim’s CEO Fabio Sandri said in an earnings call.
Dive Insight:
This month, the U.S. Department of Agriculture raised its 2023 broiler chicken production outlook by 2% due to increased slaughter and heavier weights, which the agency said will lower prices. Meanwhile, beef and pork production is expected to decline next year on reduced cattle and hog supplies.
Sandri said during an earnings call that lingering food inflation combined with higher interest rates and lower beef and pork availability means that “chicken may be advantaged given its availability, affordability and flexibility.”
Sandri also said that cases of highly pathogenic avian influenza, known as the bird flu, have slowed across the U.S., which has allowed trade restrictions to expire in many countries.
The latest disease outbreak led to the deaths of approximately 2.7 million broiler chickens and more than 395,000 broiler breeder chickens, according to USDA data. Pilgrim's is not expecting bans to ease in China, a major market for chicken producers.
Chicken producers have grappled with higher production costs, challenging market pressures and weaker wholesale prices. However, Pilgrim's has been able to navigate the uncertain situation better than most, with Chief Financial Officer Matthew Galvanoni saying the company's size allows it to "capture the upside of favorable industry conditions, while mitigating the impact of industry downturns."
Pilgrim’s shares rose 41 cents to close Thursday at $24.60 on the Nasdaq stock exchange.
