Pilgrim's Pride posts big loss, feed prices hurt

By Bob Burgdorfer

CHICAGO (Reuters) - Pilgrim's Pride Corp (PPC.N: Quote, Profile, Research, Stock Buzz), the largest U.S. chicken producer, posted a surprisingly large quarterly loss on Monday and said normal profit margins may take a year to return as feed costs remain high, sending its stock lower.

The company also forecast a loss for the current quarter, but said it is renegotiating shorter contracts with customers so that it can more quickly pass on higher operating costs.

Prices for corn and soybean meal, which are important feeds, soared this year, due in part to greater use of corn to make the biofuel ethanol.

"While we continue to pass along price increases to our customers, the simple fact is that to date, we have not been able to raise prices fast enough to match the extreme price volatility in the grain markets," Pilgrim's Chief Executive Clint Rivers said in a statement.

Rivers also warned that "American consumers are only just beginning to feel the impact of sharply higher food prices" as the higher costs are passed on.

To stem losses the company has cut production and closed facilities. It also is negotiating 90-day sales contracts with its customers, rather than one-year agreements.

"This shift away from the typical one-year contract to shorter terms has been successful primarily due to our steadfast commitment to getting it done," Bob Wright, Pilgrim's chief operating officer, said Monday during a conference call with Wall Street analysts.

The Pittsburg, Texas, company reported a loss of $111.45 million, or $1.67 per share, for the second quarter ended March 29, compared with a year-earlier loss of $40.08 million, or 60 cents per share.