Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you explain the strong market dynamics in Q4 and expectations for Q1, particularly regarding the big bird segment? A: Fabio Sandri, CEO, explained that Q4 saw strong chicken demand due to its affordability and menu penetration in food service. Despite some weather disruptions, demand in retail and food service increased, with stable production in the big bird category. This led to stable prices, and Q1 is seeing rising prices in the commodity category.
Q: Why did US profitability come in below expectations, and how did grain-based contracts affect this? A: Fabio Sandri noted that while the US portfolio includes commodity markets, two-thirds are more stable segments like small birds and case-ready operations. These segments are less volatile due to grain-based pricing contracts. Operational excellence initiatives improved performance, but prepared foods offset some commodity cycle impacts.
Q: What drove the counter-seasonal improvement in Mexico, and what are the margin expectations for 2025? A: Fabio Sandri highlighted strong chicken demand in Mexico, driven by high US commodity prices and domestic market demand. The live market in Mexico is volatile, but the company is diversifying its portfolio with prepared foods and branded fresh offerings. Margins are expected to remain stable and in double digits.
Q: How should we think about US breast prices over the summer, given current supply and demand dynamics? A: Fabio Sandri expects strong demand for chicken, particularly during the summer, with prices reacting accordingly. Despite a 1.4% supply increase, overall protein availability is low, supporting strong retail demand for chicken products.
Q: Can you discuss the impact of potential tariffs on the business, particularly with Mexico? A: Fabio Sandri stated that while there is uncertainty about tariffs, Mexico is a key trading partner, importing 24% of US chicken exports. The company doesn't expect significant trade disruptions, as Mexico is concerned about food inflation. Pilgrim's Pride's operations in Mexico provide a hedge against potential trade issues.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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