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Pilgrim's Pride; Bruised But Strong.

by 5m Editor
15 November 2007, at 9:55am

US - Despite record sales and a profit of $32 million, Pilgrim's Pride failed to meet Wall Street expectations. Share prices have dropped substantially in response to this disappointment.

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"Automation will be a key focus of our capital investment program in fiscal 2008."

O.B. Goolsby Jr., Pilgrim's Pride president and chief executive officer.

"Industry fundamentals remained solid in the fourth quarter as strong export demand and low cold-storage inventories helped sustain positive market pricing trends. Our improved profitability compared to the prior-year period resulted from higher market pricing for chicken products and an improved product mix as we succeeded in upgrading some of our commodity-type meat into higher-margin, value-added products," said O.B. Goolsby Jr., Pilgrim's Pride president and chief executive officer. "In addition, our consumer retail segment continued to post good growth as a result of increased penetration of supermarket meat and deli cases and our growing role as a category management partner."

Despite favorable industry fundamentals and the year-over-year improvement in profitability, Mr. Goolsby acknowledged that the company's earnings for the fourth quarter were below its own expectations. He said operational inefficiencies and higher fuel costs resulted in higher production and freight costs during the quarter.

"Automation will be a key focus of our capital investment program in fiscal 2008. We believe this investment, which includes labor-reducing technology, will enable us to move more products through our plants efficiently and help alleviate some of the recent issues related to a tight labor market and higher input costs," Mr. Goolsby explained.

For the full 2007 fiscal year, the Company reported net income of $47.0 million, or $0.71 per share, on record sales of $7.60 billion. Included in these results were charges of $26.5 million, $15.8 million net of tax or $0.24 per share, related to the early extinguishment of debt incurred by the Company in connection with the financing for the Gold Kist acquisition and in connection with the calling of our 9 5/8% bonds in September. In fiscal 2006, Pilgrim's Pride reported a net loss of $34.2 million, or $0.51 per share, on sales of $5.24 billion.

5m Editor