The world’s largest poultry processor has filed for bankruptcy protection as it seeks to restructure a business expected to report a fourth-quarter loss of $800m (£520m).
Pilgrim’s Pride Corporation yesterday confirmed that it has filed for voluntary Chapter 11 petitions. This means the company can continue to operate as normal throughout the bankruptcy process, while it develops a reorganisation plan to bring the company back into the black.
“Over the past year, Pilgrim’s Pride has faced a number of significant challenges including high feed costs, an oversupply of chicken, weak market pricing and softening demand,” said Clint Rivers, president and chief executive officer.
“After careful consideration of all available alternatives, the company’s board of directors determined that a Chapter 11 filing was a necessary and prudent step and the best way to obtain the necessary finance. We expect to emerge from this restructuring a stronger, more competitive company that is well positioned for growth and enhanced profitability.”
The US poultry giant has already cut 335 jobs as it saw its profits shrink on the back of high commodity prices for key inputs like maize (corn) and energy.
It hedged some of its purchases but, as prices moderated, it lost money on those hedges. The company has delayed issuing its fourth-quarter results, but reports suggest a loss of $800m, largely due to those bad hedges.
Additionally, Pilgrim’s Pride is saddled by debt due to its $1.3bn (£0.9bn) acquisition of rival Gold Kist early last year.
Pilgrims Pride has the capacity to process more than 45 million birds a week from its 35 chicken processing plants in the US and Mexico. About 6400 producers rear birds for the company’s operations. The company also produces 42 million dozen table eggs per year.