Pilgrim's Pride pins loss on feed costs

By DAVID KOENIG AP Business Writer

DALLAS (AP) - Pilgrim's Pride Corp., the nation's largest chicken producer, said Monday its quarterly loss widened from a year ago as it paid more for feed and took a restructuring charge.

The Pittsburg, Texas-based company lost $111.5 million, or $1.67 per share, in the three months ended March 29 compared with a loss of $40.1 million, or 60 cents per share, a year earlier.

The results included impairment and restructuring charges of $17.7 million, or 17 cents per share, to close a processing plant and six distribution centers. Excluding those, the company lost $1.50 per share.

Thomson Financial said analysts expected a loss of 81 cents per share. The estimates typically exclude one-time items.

Revenue rose to $2.10 billion, a tick above the $2.09 billion forecast by analysts and the $1.99 billion from a year ago.

The company said its costs for corn and soybean meal in the quarter rose $200 million from a year ago, which it blamed on the use of corn to make ethanol for fuel, causing feed grain prices to spike.

Chief Executive Clint Rivers said the results "reflect the crisis facing our company and industry from record-high feed costs caused by the federal government's deeply flawed ethanol policy."

"American consumers are only just beginning to feel the impact of sharply higher food prices," as food producers pass along more of their higher costs, Rivers said.

Rivers said the company hasn't been able to raise prices fast enough to cover higher feed costs. He called the current situation facing poultry producers "among the most difficult I have seen during my 27 years in the business."

A week ago, Tyson Foods Inc., the world's largest meat producer, also blamed higher feed and fuel costs for causing it to swing to a quarterly loss of $5 million. Chicken accounts for one-third of Tyson's sales.

Separately, Pilgrim's Pride said Monday it agreed to a change in its credit agreement with lenders that includes an increase of 0.5 percent in its interest rate in exchange for temporary easier covenants and a pledge of additional property as collateral.

Pilgrim's Pride recently announced it would close a processing plant and six distribution centers and Rivers said Monday that the company was still considering the sale, closure or consolidation of others.

The company has also said it plans to cut production by 5 percent this year, a move designed to force chicken prices higher.

The March quarter was the second in the company's fiscal year. Through the first six months, the company lost $143.8 million, or $2.16 per share, compared with a loss of $48.8 million, or 73 cents per share, a year earlier. Sales have increased to $4.15 billion from $3.28 billion.

Pilgrim's Price shares fell 26 cents to $23.84 in morning trading after falling as low as $22.52 earlier in the session.

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AP Business Writer Lauren Shepherd in New York