US – Pilgrim’s Pride Corp., the second-largest US poultry producer, has benefited greatly from consumers trading down to chicken during inflation, posting powerful performance for its third fiscal quarter.
During its third-quarter earnings call, the company, which is majority owned by Brazil-based JBS, said the shift helped it increase revenue by 16.8% to US$4.5 billion in the third quarter from the same period a year earlier.
Its success in the quarter was particularly carried by the domestic trade, with its flagship Pilgrim’s and Just Bare chicken brands growing more than 45% year-over-year, aiding the processor to achieve Adjusted earnings of US$460.5 million, a 33% increase.
Earlier this year, CoBank predicted shoppers would begin trading down to poultry given the increasing cost of beef.
The USDA also predicted a decline in beef consumption for the 2022-23 period because of high costs, attributing the drop to lower cattle herds and growing exports.
Fabio Sandri, Pilgrim’s Pride’s CEO, said: “Typically, chicken has been more resilient to inflation and economic downturn in retail than other proteins. Moving forward, we will continue to invest in automation, portioning, and other projects to further improve our operational performance.”
However, he emphasized there are still roadblocks in the current environment citing elevated costs for feed, utilities, labor, and packaging as difficulties the companies will continue to face in the coming months.
With chicken prices still lagging behind inflation, particularly in Europe, Sandri hinted that more poultry-price hikes could be coming.
He explained that rising interest rates and soaring fuel prices pinch consumers while meat companies have been getting hit by elevated prices for animal feed, packaging, and labor prices.
In August during Tyson Foods Third Quarter 2022 Results, CEO Donnie King said “substantially improved” earnings for chicken compared to the previous year offset declines in the more expensive beef and pork, signaling stronger demand for chicken.
During the quarter, sales for chicken rose 26% to US$4.4 billion, and for the year are up a similar percentage to US$12.3 billion.
Tyson Foods said USDA projects chicken production will increase by approximately 1% in fiscal 2022 as compared to fiscal 2021 and with such insight, it anticipates an adjusted operating margin of 5% to 7% for fiscal 2022.
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