Pilgrim's Pride Inspires Shareholder Confidence
Pilgrim's
Pride Corporation (NYSE: PPC) shares rose sharply after the company announced
that it would stop production at two of its chicken-processing plants in a move to
rein in losses. The painful actions are deemed necessary by the company in order to
position it to emerge from the down cycle as a much stronger and more efficient competitor.
The news comes after Pilgrim's Pride announced a third-quarter loss of $52.8 million
after posting a $62.6 million profit just a year earlier. The results come on the
heels of higher feed and commodity costs that are quickly eating into profit margins.
Meanwhile, the chicken industry is also facing pricing pressures as a result of over-supply.
Pilgrim's Pride stock is far below its 52-week high of $41 per share on such problems.
Oil prices may have subsided in recent days, but it is the feed costs that has many
concerned. Meanwhile, there are no signs that chicken prices will recover as consumers
purchase less and supply continues to grow.
The hope is that today's job cuts will at least reduce costs in an effort to boost
the bottom line. Whether or not this effort will be pay off remains to be seen, but
at least it is a step in the right direction, and that's what shareholders were looking
for today...
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