Pilgrim's Pride Corp. reported a steep drop in second-quarter profit Wednesday as falling chicken commodity prices offset firm consumer demand, the company said.
The company posted net sales of $4.6 billion for the quarter ended June 28, down 2.8% from a year earlier. Adjusted EBITDA fell 47.6% to $360.0 million, a 7.8% margin, compared with $686.9 million a year ago. GAAP net income dropped to $13.2 million, or 6 cents per share, from $1.49 per share in the same period last year.
CEO Fabio Sandri attributed the decline largely to commodity market pressure. "Chicken demand remained firm in all regions as affordability continued to resonate with consumers across retail and foodservice," Sandri said, adding that supply growth outpaced demand during the quarter.
The jumbo commodity cutout market fell more than 25% from a year earlier, the company said, though margins improved sequentially from the first quarter following plant upgrades and gains in live operations.
U.S. Prepared Foods was a bright spot. Sales and margins both rose from a year ago, and retail sales of the Just Bare brand climbed more than 30%, making it the second-largest brand in the fully cooked category. The company is building a new prepared foods facility in Walker County, Georgia, and is separately investing in Ellijay, Georgia, to expand deboning capacity for small birds.
Internationally, Europe posted higher sales and volumes on continued demand for poultry and meal products, though margins in the United Kingdom pork business were pressured by rising imports from Europe and added costs tied to the Middle East conflict. In Mexico, volumes grew as retail fresh sales of the Pilgrim's brand rose nearly 30%, though margins were compressed by higher domestic production and imports.
The company said its net leverage ratio stood at 1.43 times Adjusted EBITDA, below its target range of 2 to 3 times.
Pilgrim's Pride also said it was named to several workplace recognition lists during the quarter, including Newsweek's "America's Greatest Workplaces" in the U.S. and "Employer of the Year" from The Grocer in Europe.
Pilgrim's Pride trades on the Nasdaq under the ticker PPC.
