Pilgrim’s Pride plans $450 million investment to support profit growth

Pilgrim’s Pridethe American poultry and prepared foods company majority-owned by Brazil’s JBS, plans to spend $450 million on capital projects over the next three years.

Investments will focus on the United States, including the expansion of Pilgrim’s small bird facility in Athens, Georgia, as well as the construction of a “protein conversion” plant for pet food in the same state. The Nasdaq-listed company also plans to build a convenience food plant to support the growth of its value-added Just Bare chicken brand.

Colorado-based Pilgrim’s Company inherited the Just Bare line in 2016 when it acquired GNP Company, along with production facilities in Cold Spring and Luverne, Minnesota, and Arcadia, Wisconsin. The company, 80% owned by meat giant JBS, has since expanded into M&A, particularly in Ireland and the UK.

“Given the momentum of our market and our focus on profitable growth, we are announcing a number of new investments in the United States,” Pilgrim’s said in its second quarter earnings announcement last week, adding that the funding would include “operational excellence improvements via automation”.

Pilgrim’s did not provide a specific location for the new prepared foods plant, other than to say it will be located in “the southeastern United States to cultivate our brand growth and diversify more of our portfolio.

He added: “Taken together, these investments will simultaneously enable sufficient capacity for revenue growth with our key customers, improve operating margins, create value for our shareholders and provide opportunities for a better future. to our team members.

CFO Matt Galvanoni provided more color on a follow-up call with analysts: “Our current estimates indicate that these investments will total approximately $450 million over the next three years. As a reminder, during the earnings call in February, I indicated that the investments for 2022 would be between 410 and 430 million dollars. We expect incremental spending in 2022 associated with these new projects to be approximately $150 million.

Galvanoni said the projects should begin to “come into play” within the next 12 to 18 months.

Pilgrim CEO Fabio Sandri added on the call with analysts: “We are confident that these investments will drive the growth of our business, while strengthening our partnerships with our key customers, further diversifying our portfolio and supporting operational excellence.

“As a result, we can generate stronger and more consistent sales growth and margin expansion that accelerates our business momentum and creates additional competitive advantage for our business.”

The Athens plant expansion will increase small bird capacity by 20-30%, Sandri said, noting that “it’s not significant growth but it’s very important” for a “specific key customer. “.

Pilgrim’s expanded its presence in the UK last year with the acquisition of meat processor Randall Parker Foods. Months earlier, the company bought a handful of UK assets from the Irish Kerry Group, including the company’s meat and meals operations.

He had also previously bought British pork group Tulip from Danish Crown and meat processor Moy Park.

From the second quarter to June 26, Pilgrim’s recorded sales of $4.6 billion, an increase of 27.3% over the previous year, including a 96% growth of both its eponymous brand and by Just Bare.

Adjusted EBITDA increased 67.7% to $623.3 million, with associated margin up 3.3 percentage points to 13.5%. The company also posted a profit of $362 million, compared to a net loss of $166 million for the corresponding period.

In the first half, sales climbed 28.4% to $8.8 billion. Adjusted EBITDA increased 79.9% to $1.1 billion, with margin up 3.6 points to 12.7%. Net income also fell, reaching a profit of $642.5 million against a loss of $66 million.

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