UPDATE 2-Pilgrim's Pride Corp reports wider Q1 loss

(Adds details, economist comment, byline)

By Bob Burgdorfer

CHICAGO Feb 5 (Reuters) - U.S. chicken producer Pilgrim's Pride Corp PGPDQ.PK, which is operating under federal bankruptcy protection, reported a much wider first quarter loss on lower revenue on Thursday.

The company filed for Chapter 11 bankruptcy protection on Dec. 1, 2008, after struggling for nearly a year with high feed costs and low meat prices. Plus it was saddled with debt after buying smaller rival Gold Kist Inc in December 2006.

In a filing with the U.S. Securities Exchange Commission, the nation's largest chicken producer reported a loss of $228.78 million, or $3.09 per share, for the quarter ended Dec. 27 compared with a year-earlier loss of $32.33 million, or 49 cents a share.

The results included $3.7 million in restructuring charges and a $1.3 million adjustment that reduced severance and employee retention costs.

"We continue to review and evaluate various restructuring and other alternatives to streamline our operations," the company said in the filing.

These alternatives may include selling assets, idling facilities, consolidating operations and functions, and relocating or reducing production, it said.

Revenue for the period was $1.88 billion compared with year-ago revenue $2.05 billion.

Since Dec. 1 Pilgrim's Pride has named a new chief executive officer and received court approval for debtor-in-possession financing.

The chicken industry struggled for much of 2008, due to high costs for feed and fuel early in the year and later by a drop in domestic and export sales as global economies weakened.

In January, Tyson Foods Inc (TSN.N) said its chicken unit, the second largest behind Pilgrim's Pride's, had a quarterly operating loss of $286 million due to higher feed costs and losses on hedging grain purchases. A year earlier, the unit had a profit of $48 million.

"This is bad," Ann Gilpin, analyst at Morningstar, said of Pilgrim's Pride's results. "I think it puts pressure on them to cut production even more."

In response to losses, chicken producers have cut production. Tyson said it cut production about 5 percent in December.

Chicken prices have begun to move higher and feed costs have come down from the high levels in early 2008. As a result, conditions should improve for chicken companies, said Paul Aho, economist with Poultry Perspective.

"That should be the worst quarter," he said of the just completed period. "Chicken prices have gone up and grain prices are still low. All the winds are in the right direction."

Pilgrim's Pride has laid off workers and said that in the current quarter it will reduce production by eliminating a work shift at a production complex.

In 2008, the company laid off about 2,300 workers, closed two production complexes, and consolidated a third complex into other facilities.

(Reporting by Bob Burgdorfer; Editing by Bernard Orr)