Replies to post #968 on Pilgrim''s Pride Corp (PPC)

[SAE]

Pilgrim's Pride Expects To Remain Profitable Despite Grain Costs

Pilgrim's Pride Corp. (PPC) should remain profitable in 2011, but higher grain costs and an uncertain economy will pose significant challenges, the company's new chief executive said Friday.

The world's second-largest poultry producer, of which Brazil's JBS SA owns a 67% stake, will spend at least $500 million more on feed in 2011, President and CEO Bill Lovette said. That figure is identical to the increase that competitor Tyson Foods Inc. (TSN) projected last week.

Pilgrim's Pride has purchased all of its grain needs through early August, at what based on the current market would be favorable prices, Lovette said.

The company is planning to offset the higher grain costs through increased sales, particularly with restaurants, and by streamlined production. Lovette said Greely, Colo.-based company plans to realize $400 million in savings in 2011, double the amount it projected in the prior quarter.

Among the changes are a shift to hand-deboning, away from automated processes, a move that Tyson last year credited with improving its bottom line.

Lovette also said he is "very bullish" and export demand and that the company is particularly well positioned because of its ties to JBS.

Still, Lovette said that in December two-thirds of chicken producing operations operated in the red and that industry cutbacks were likely.

Pilgrim's Pride has backed away from previous plans to re-open two idled plants. Lovette said the company planned to run at full capacity at existing plants, including a recently re-opened plant in Georgia.

That differs from former statements in the prior quarter by then Chief Executive Don Jackson, who said the company planned to expand capacity at existing plants. Jackson is now head of JBS' U.S. division.

Many analysts say the industry must scale back production to avoid a glut and to deal with rising feed costs.

Shares of PPC, which were up more than 9% in early trade, retreated during the earnings call, but were still up 3.19% to $8.09.

-By Ian Berry, Dow Jones Newswires; 312-750-4072; [e-mail]

http://ih.advfn.com/p.php?pid=nmona&article=46422184