Pilgrim’s Pride beats revenue, EPS estimates on Mexico demand

GREELEY  — Pilgrim’s Pride Corp. (Nasdaq: PPC) shares rose just north of 8 percent Wednesday after quarterly earnings show chicken  popularity benefitted from U.S.-Mexico trade tensions.

The Greeley-based chicken producer posted $2.84 billion in revenue, $170.1 million in net income and $0.68 in earnings per share, according to quarterly filings with the U.S. Securities and Exchange Commission.

Those beat analyst consensus revenue estimates by $1.43 million by 8 cents per share.

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Chicken gained popularity compared to pork in Mexico after the Mexican government placed a 20 percent tariff on the commodity last June in response to U.S. tariffs, spiking prices for the protein and boosting chicken demand. Mexico lifted those tariffs this May.

Pilgrim’s reported $68 million in earnings before interest and taxes in Mexico during Q2, compared to $10 million last quarter and $62 million in Q2 2018.

In a conference call with analysts, Pilgrim’s CEO Jayson Penn said while Mexico’s live animal markets are subject to volatility, the company can take advantage of potential upside in the country.

“We expect demand for chicken in Mexico will continue to outstrip our supply, given rising disposable income and consumers’ desire to improve their protein diet,” he said.

Pilgrim’s chief financial officer Fabio Sandri told analysts the company is planning to increase production at its plants by 2 to 3 percent by 2021 to service expected increases in global demand, and expects to see pork and beef production decline in coming years.

“So in total for protein availability, I think it’s going to be a great year for chicken,” he said.

Pilgrim’s Pride stock rose 8.28 percent to close trading Thursday at $29.30.