GREELEY, Colo. (AP) — Poultry producer Pilgrim's Pride Corp. reported a loss during its fourth quarter because of rising feed costs.
Like other poultry producers, Pilgrim's Pride has been squeezed between rising costs and flat demand for poultry. The company has cut costs, and on Friday said that 2011 was a "transformational" year in its efforts to build a leaner operation.
CEO Bill Lovette said the company plans to make $200 million in cost and efficiency improvements this year and has changed its sales contracts to protect the company against volatile crop prices.
"We have confidence in this plan because we created it from the ground up," Lovette told analysts during a conference call Friday.
Brazilian meatpacker JBS SA bought a majority stake in the poultry company in 2009 as it emerged bankruptcy protection. It owns about two-thirds of Pilgrim's outstanding stock.
The company reported a net loss during the quarter ended Dec. 31 of $85.4 million, or 40 cents per share, compared with net income of $41.8 million, or 20 cents per share, in the same period a year before.
Revenue during the quarter was $1.83 billion, nearly flat from $1.81 billion in the prior year period.
Analysts had been expecting an adjusted loss of 29 cents a share and revenue of $1.88 billion, according to FactSet. The company didn't offer an adjusted earnings figure, but it reported a $15 million income tax expense for the fourth quarter, compared with an income tax benefit of $19.5 million a year earlier, while it reported no costs for extinguishing debt early, compared with $11.8 million in 2010's fourth quarter.
Lovette said Pilgrim's Pride has is partnering more closely with key customers and selling processed products for export. He said exports accounted for about 13 percent of the company's chicken sales in 2011 — 40 percent more than the year before. In 2012, Pilgrim's Pride aims to boost exports by a double-digit margin, he said.
The company is also changing its pricing strategy, and moving away from long-term contracts that could lock into unprofitable prices. That gives the company flexibility to change the prices it charges based on market conditions, Lovette said. Volatility in grain prices in 2011 helped wipe out the company's profit.
The new plan might put Pilgrim's on the path to a turnaround. B. Riley analyst Ian Corydon said that one measure of the company's fourth-quarter profit last year was much stronger than he had expected, and he believes results will improve in the current quarter and in 2012.
That profit measure, which excludes income tax costs, debt interest expense and restructuring charges, came in at $22.6 million. Corydon had expected a loss of $14.8 million.
For the full year of 2011, Pilgrim's Pride reported a net loss of $496.8 million, or $2.32 per share, with net income of $87.1 million, or 41 cents per share, in 2010. Revenue rose 9.5 percent to $7.54 billion from $6.88 billion.
Shares gained 17 cents, or 3.1 percent, on Friday to close at $5.69. They were unchanged after hours, and they've traded as high as $2.91 and low as $8.41 the past year.