Pilgrim’s Pride’s adjusted EBITDA fell 48% in the second quarter as excess chicken supply in the United States drove commodity prices lower, squeezing profitability at the Nasdaq-listed poultry producer controlled by Brazilian meatpacker JBS.
The company reported adjusted EBITDA of $360 million for the April-June period, slightly below the $367 million average of seven analyst estimates compiled by Koyfin. Its adjusted EBITDA margin narrowed to 7.8% from 14.4% a year earlier.
Net sales fell 2.8% to $4.6 billion, while net income attributable to Pilgrim’s plunged 96% to $13.4 million. Reported earnings were also affected by $135.7 million in provisions for litigation settlements and $25.6 million in asset impairments.
“While consumer interest in chicken continued to be healthy across all channels, supply growth rose faster than demand,” CEO Fábio Sandri said in the earnings release.
The sharpest impact came in Pilgrim’s Big Bird business, which processes heavier chickens and is more exposed to commodity pricing. The jumbo commodity cutout, a benchmark for key cuts from larger birds, fell more than 25% from a year earlier.
Adjusted EBITDA in the U.S. business dropped 52% to $231 million.
Mexico also suffered from excess chicken supply, with adjusted EBITDA falling 75% to $22.6 million. Higher domestic production and chicken imports, along with greater egg availability and increased pork imports, expanded overall protein supply and weighed on margins, the company said.
Still, Sandri pointed to an improvement from the first quarter, when downtime at plants undergoing modernization projects weighed heavily on results. The completion of plant upgrades and gains in live operations helped margins improve sequentially.
Pilgrim’s shares fell 1.8% in after-hours trading following the release. The company had a market capitalization of about $7 billion.
This story was translated from the original Portuguese with the assistance of artificial intelligence and reviewed by The AgriBiz editorial staff.
