Monday, August 27, 2012

Pilgrim's rating outlook revised down on high feed costs


    Standard & Poor's Rating Services has dropped its outlook on Pilgrim's Corp. from developing to negative, reflecting the risk that earnings may decline significantly by the fourth quarter of fiscal 2012 and into 2013 if pricing actions don't fully offset higher feed costs, according to the company.
    "The outlook revision to negative reflects our concerns about the impact higher feed costs will have on Pilgrim's earnings, given the drought in the Midwestern states," said Standard & Poor's. "We believe the drought will lead to higher feed costs, which could pressure the company's operating performance during the next 12 months." The company said it believes Pilgrim's upcoming contract and pricing discussions with key customers will determine the company's ability to pass through price increases, but that it is anticipating weaker earnings overall in 2013. "Pilgrim's Pride's earnings have demonstrated a high degree of volatility and we expect this trend to continue for the company in the future," said Standard & Poor's.
    JBS S.A., Brasil Foods S.A. and Marfrig Alimentos S.A. have also had their ratings dropped in recent days due to projected feed price increases.

No comments:

Post a Comment