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Apr-14-2008Pilgrim's Pride to cut chicken production by 5%(topic overview)
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As we have said in the past, reducing overall supply to better match demand is an important component in helping return the industry to profitability,' Rivers added. Pilgrim's Pride stated that it would continue to closely monitor industry fundamentals and take whatever actions that is necessary to better balance its supply and demand and to position itself for sustained, profitable growth. The company also said it is continuing to review its production facilities for potential mix changes, closure and/or consolidation in response to current negative industry fundamentals. Early March, Pilgrim's Pride said it would cut about 1,100 jobs or 2% of the total workforce, as it is closing a chicken processing complex and six of its 13 distribution centers in the United States. This is in order to counter surging feed-ingredient costs. As part of this plan, the company said it would close its chicken-processing complex in Siler City, which employs about 830 people. [1] The New Oxford facility processes 175,000 turkeys per week and employs about 530 workers, including the distribution center. Pilgrim's Pride, which operates 37 chicken processing and 12 prepared-foods facilities, blamed the U.S. Government's granting of generous federal subsidies to corn-based ethanol blenders for the unprecedented increases in feed-ingredient costs this year. Soaring feed-ingredient costs also negatively impacted results of the company's recently concluded first quarter as growth in sales failed to offset those costs. This was coupled with higher production, freight and fuel costs. The company believes that the rising feed costs might hit the entire chicken industry in 2008 and estimates its feed-ingredient costs for fiscal 2008 to be up more than $700 million. Announcing its first quarter results in January, Pilgrim's Pride reported a wider loss hurt by higher feed-ingredient costs.[1]
The company noted that it would continue reviewing the situation and the cut will remain in effect until industry margins return to more normalized levels. The Pittsburg, Texas-based Pilgrim's Pride stated that the 5% reduction in weekly chicken processing is a part of its endeavor to provide better balance to supply and demand in the wake of record-high costs for feed ingredients such as corn and soybean meal.[1] PITTSBURG, Texas, April 14 /PRNewswire-FirstCall/ -- Pilgrim's Pride Corp. NYSE: PPC today said it plans to reduce weekly chicken processing by approximately 5% in the second half of fiscal 2008 when compared to the same period a year ago, as part of its continuing effort to better balance supply and demand amid record-high costs for feed ingredients such as corn and soybean meal. The reduction began with eggs set earlier this month and should take full effect with weekly processing beginning in June.[2]
Pilgrim's_Pride today (14 April) announced plans to cut weekly chicken processing at its plants by around 5% later this year amid soaring commodity costs. The reduction began with eggs earlier this month and will take full effect with weekly processing beginning in June and will remain in effect until industry margins return to "more normalized levels", the U.S. poultry giant said.[3] The Pittsburg, Texas-based company expects the reduction to take full effect with weekly processing starting in June. It plans to leave the reduction in effect 'until average industry margins return to more normalized levels.' The company noted that the reduction reflects the impact of the previously announced closing of a plant in Siler City, N.C., which it expects to be completed by June. Pilgrim's Pride added that it continues to review its production facilities for potential mix changes and acknowledged that its El Dorado, Ark., processing complex 'is among those being reviewed for possible changes' although a decision has yet to be made.[4] Pilgrim's Pride also said it will continue to review its production facilities for potential mix changes, plant closures and consolidation in response to " current negative industry fundamentals." The company said its processing plant in El Dorado, Ark., is among those being reviewed for possible closure.[5] As we have said in the past, reducing overall supply to better match demand is an important component in helping return the industry to profitability." The company also said it is continuing to review its production facilities for potential mix changes, closure and/or consolidation in response to current negative industry fundamentals. Pilgrim's Pride acknowledged that its processing complex in El Dorado, Ark., is among those being reviewed for possible closure. The company emphasized that no decision has been made at this time.[2]
EL DORADO, Ark.' Pilgrim's Pride Corp. has told managers and workers at its facilities in El Dorado that the plants may be shut down if the company does not see improvement in quality and a return on its investment, the company said Thursday.[6] Workers at El Dorado and three other Pilgrim's Pride plants in Arkansas are included in the court action.[6]
More than 1,600 people work at a processing plant, a feed mill and a hatchery in Union County owned by Pilgrim's Pride. Pilgrim's Pride spokesman Ray Atkinson said Thursday there is no timetable for the plant to turn itself around, but he said there isn't much time. 'This is an extremely serious situation in El Dorado.[6] 'We are in a situation where we have to do some things to adjust to that,' Atkinson said. Pilgrim's Pride purchased the El Dorado plant in 2003 when ConAgra sold its poultry operations.[6]
'There is no timetable (for a closure decision), other than that we have to see significant and immediate changes,' Atkinson said. Workers at 21 Pilgrim's Pride plants have filed a federal lawsuit in Arkansas seeking payment for the time they spent putting on and taking off protective gear.[6]
The company noted that the 5% reduction includes the impact of the previously announced closure in June of the Pilgrim's Pride plant in Siler City. Pilgrim's Pride began the processing reduction process with eggs set earlier this month. This is expected to take full effect with weekly processing beginning in June.[1] Pilgrim's Pride said the reduction should take full effect with weekly processing beginning in June and will remain in place "until average industry margins return to more normalized levels."[7]
CHICAGO, April 14 (Reuters) - Pilgrim's Pride Corp (PPC.N: Quote, Profile, Research ) said on Monday it will reduce weekly chicken processing by roughly 5 percent from year-earlier levels because of soaring costs for corn, soymeal and other feed ingredients.[7] PITTSBURG, Texas -- Pilgrim's Pride Corp. plans to reduce chicken processing by about 5 percent in the next six months to cut costs amid higher feed prices, the company said Monday.[8]
NEW YORK, Apr. 14, 2008 (Thomson Financial delivered by Newstex) -- Pilgrim's Pride Corp. (NYSE:PPC) Monday disclosed plans to reduce its weekly chicken production by about 5% in the second half of fiscal 2008 because of high feed costs.[4] Pilgrim's Pride also noted that it believes soaring feed costs might hinder the U.S. Department of Agriculture, or USDA, expectation of 3% growth for U.S. chicken industry in 2008.[1]
No final decision has yet been made. "Soaring feed-ingredient costs fuelled by the federal government's misguided ethanol policy has created a crisis in our industry, the true effects of which are only just now beginning to be felt by American consumers in the form of higher food prices," said Clint Rivers, president and CEO. "It is clear that chicken producers of all sizes are feeling the tremendous financial strain from these additional grain costs." The company believe the cuts will "strike a better balance" between production and demand and "strengthen" its competitive position.[3] "Soaring feed-ingredient costs fueled by the federal government's misguided ethanol policy has created a crisis in our industry, the true effects of which are only just now beginning to be felt by American consumers in the form of higher food prices," said Clint Rivers, president and chief executive officer. "Over the past two weeks, a growing number of smaller chicken producers have announced production cutbacks in an effort to manage these unprecedented increases for corn and soybean meal, which are expected to add billions of dollars of cost to our industry this year. It is clear that chicken producers of all sizes are feeling the tremendous financial strain from these additional grain costs. We have been encouraged by these public announcements, for they indicate that the production cutbacks this time are being shared more broadly across the industry, rather than limited to just the largest processors, as was the case last year.[2]
The chicken industry has been hammered by soaring prices for corn, a key feed ingredient, as more of the crop is being used to produce ethanol. [7]
Pilgrim's Pride, the largest chicken processor in the country, said the rising costs of the corn and soybean meal it uses for feed led to the move.[8] The company expects to record asset impairment and other charges of about $21.7 million or $0.33 per share. Two days before announcing the workforce reduction, Pilgrim's Pride exited its turkey business by selling off the turkey production facility and distribution center in New Oxford to New Oxford Foods, LLC, a newly formed wholly-owned subsidiary of Hain Pure Protein Corp. This sale will allow Pilgrim's Pride to focus on its long-term strategy of building its core chicken business, the company noted.[1] Pilgrim's Pride also plans to shut down distribution centers in Oskaloosa, Plant City, Pompano Beach, Jackson, Nashville, and Cincinnati.[1] The 5% reduction includes the impact of the previously announced closing of the Pilgrim's Pride plant in Siler City, NC, which should be completed by June.[2] The 5% reduction includes the impact of the previously announced closure of the company's Siler City plant. Another closure may also be on the cards as the company confirmed it is looking at the possible shut-down of its El Dorado, Arkansas facility.[3] The company did not specify anticipated cost savings or reduced revenue from less output. It said the output reduction will include the lost output from the plant in Siler City, N.C., that is closing in June.[8]
We don't want to close that complex, but unless there are immediate changes that will be our only option,' Atkinson said. On March 12, the company announced the closure of a processing plant in North Carolina and six of its 12 distribution centers. The company also said it would review its other operations and would consider more closures. [6] According to company spokesman Ray Atkinson, there is no timetable for the plant to turn itself around, but there isn't much time. "This is an extremely serious situation in El Dorado.[9]
Over 1,600 people work at a processing plant, a feed mill and a hatchery in Union County owned by Pilgrim's Pride. [9] Pilgrim's Pride Corp. (PPC) said it plans to reduce weekly chicken processing by about 5% in the second half of fiscal 2008, as part of an effort to balance supply and demand.[5] Pilgrim's Pride employs approximately 54,500 people and operates 37 chicken processing and 12 prepared-foods facilities, with major operations in Texas, Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia, Mexico and Puerto Rico as well as other facilities in Arizona, Iowa, Mississippi, Ohio and Utah.[10]
Pilgrim's Pride is the world's leading chicken producer, with more than 56,000 employees, 38 plants and various other operations throughout the southeast and Mexico.[6] Pilgrim's Pride Corporation is the largest chicken company in the United States and Puerto Rico and the second-largest in Mexico.[10]
'We've invested millions in that facility and have not seen a return on that investment,' Atkinson said. Executives from Pittsburg, Texas-based Pilgrim's Pride met with workers on Tuesday and Wednesday to explain their thinking.[6] PITTSBURG, Texas, April 14, 2008 /PRNewswire-FirstCall/ -- Pilgrim's Pride Corporation NYSE: PPC will host a conference call with investors on Monday, May 5, 2008, at 10 a.m. Central (11 a.m. Eastern) to discuss financial results for the second quarter of fiscal 2008.[10] Pilgrim's Pride reported that total U.S. turkey sales were $122.3 million for fiscal 2007.[1]
Quarterly net sales increased to $2.09 billion from $1.34 billion in the same quarter last year. The company is scheduled to report its second quarter financial results on May 5, 2008.[1] The company has been straining from skyrocketing feed costs, with $1.3 billion annually in added feed costs compared with two years ago.[6]
The plant's costs are too high and quality is below that of similar facilities.[6]
'We believe the cuts we are enacting will strike a better balance between production and demand and strengthen our competitive position. [1]
SOURCES
1. Pilgrim's Pride To Initiate Steps To Counter Soaring Feed Costs; To Cut Weekly Production By 5% In FY08 Second Half - Update [PPC] - RTTNews, Today's Top Stories, Global Newswires, ToDay's Top News,Global Business news .
2. Pilgrim's Pride Corporation :: Pilgrim's Pride to Reduce Weekly Production by 5% in Second Half of Fiscal 2008 in Response to Soaring Feed Costs
3. US: Pilgrim's Pride to reduce chicken production : Food News & Comment
4. Pilgrims Pride to reduce weekly chicken production by 5%
5. Pilgrims Pride To Reduce Weekly Production 5% In 2008 2nd Half
6. Pilgrim's Pride considers shuttering El Dorado plants due to high costs
7. UPDATE 1-Pilgrim's Pride to cut chicken processing by 5 pct | Industries | Consumer Goods & Retail | Reuters
8. Pilgrim's Pride to Curb Processing | Chron.com - Houston Chronicle
9. pilgrims_pride_may_close_another_plant.html
10. Pilgrim's Pride Corporation :: Pilgrim's Pride to Webcast Second-Quarter Conference Call with Investors
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