Pilgrim's Pride on Monday reported a $111.4 million quarterly loss attributed to rising feed prices as officials ponder cost-cutting actions, which could include closing more facilities, company officials said.
Clint Rivers, president and chief executive officer, called the situation a "crisis." He said rising costs for corn and soybean meal, which are used in chicken feed, were up by $200 million in the quarter compared with the same period a year ago.
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| Clint Rivers is the Pilgrim's Pride president and chief executive officer.
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Pilgrim's Pride is closing one processing plant and six distribution centers in an effort to cut costs. Rivers said the company is considering additional cost-cutting measures.
"We continue to evaluate our production facilities for potential mix changes, closure, sale and/or consolidation in an effort to position the company for a return to profitability," Rivers said in a prepared statement. He gave no indication if any East Texas facilities would be involved in closures.
Ray Atkinson, director of corporate communications, said Monday that no decisions have been made regarding Pilgrim's East Texas facilities or operations.
For the first six months of the company's fiscal year, Pilgrim's reported a net loss of $143.8 million on $4.1 billion in sales. That compares with a loss of $82.9 million on $3.8 billion in sales for the first six months of fiscal 2007.
The company said its results were hurt by restructuring charges and expenses for closing the processing plant and distribution centers.
Its quarterly revenue rose 6 percent to $2.1 billion from $1.99 billion in the same period a year ago. Analysts predicted $2.09 billion.
Rivers said the escalating grain feed prices are resulting in food companies shutting down plants and eliminating thousands of jobs in rural America.
"The federal government has helped spark a growing worldwide food crisis by mandating corn-based ethanol production at the expense of affordable food," he said in a prepared statement. American consumers are only starting to feel the impact of sharply rising food prices, he said.
"There will be much more to come as food producers fully pass along these higher input costs," he said. "Meanwhile, the government is using tax dollars to provide generous subsidies to big oil companies for blending ethanol."
Compounding the problem are stiff duties on imported ethanol that Rivers said protects domestic producers at the expense of consumers. The company earlier announced a 5 percent reduction in poultry production beginning in June to bring supply in line with demand, Rivers said.
The company's call for action received support from Senate Republicans who on Monday asked environmental regulators to halt the country's ethanol output expansion plans amid rising food prices. Twenty-two Republican senators, including presidential candidate Sen. John McCain of Arizona, sent a letter to the Environmental Protection Agency suggesting it waive or restructure rules that require a five-fold increase in ethanol production during the next 15 years, according to the Associated Press.
Pilgrim's Pride shares fell nearly 1 percent, closing in Monday trading on the New York Stock Exchange at $23.87, down 23 cents from Friday's close.
