Prudent operational strategies have helped Pilgrim’s Pride Corporation PPC is set to stay afloat amid difficult market conditions induced by the pandemic. This well-known fresh and frozen chicken products company benefits from key product capacity expansion efforts, robust online sales, and prudent marketing strategies. In addition, the solid growth in Mexico and the gradual revival of US operations were advantages for the company. Let’s take a closer look.
Efforts to increase capacity and product offerings
Pilgrim’s Pride’s customer-centric approach has led the company to develop unique offerings that provide competitive advantage. In fact, the company’s focus on key customers is helping to refine its portfolio and create competitive advantage over its peers, especially amid the disruption caused by the coronavirus. Management is on track with a number of projects to support the growth of its key customers. As part of this, the company is doubling the capacity to deliver cases at its Cold Spring, Minnesota facility. In addition, Pilgrim’s Pride is increasing the mix of more stable, cardboard-ready items and expanding the production of Just BARE branded items by 20%. In addition, it is converting a standardized large boning line for birds to effectively meet demand.
In addition, the company has steadily expanded the marketing support of its brands in expanding and opening up new regions. In addition, it makes frequent use of supply chain improvements to increase efficiency and reduce costs. In this respect, good progress has been made with the development of automation technology for its processing plants. Additionally, the company’s dedicated efforts, including zero base budgeting and the positive impact of acquisitions, are designed to create synergies. Pilgrim’s Pride is also strengthening its portfolio through innovations. It has expanded its product mix for the organic category, including no-antibiotics-ever products, to meet customers’ evolving tastes. In addition, the company continues to see solid growth in online sales, largely due to the strength of its ready-to-eat and ready meal portfolio.
The story goes on
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Strong sales in all regions
In the first quarter of 2021, the company saw sales growth in Mexico, the UK, and Europe, as well as the US, which in turn boosted sales. The company’s Mexican operations benefited from the normalization of the economic environment, a balanced supply / demand scenario and an increased proportion of non-commodity products. In addition, the growth in demand for ready meals was positive. That being said, the company’s combined European operations saw growth supported by prudent operational improvements despite weak food service volume due to lockdowns and costs related to the pandemic.
In addition, the company announced that market conditions in the United States improved in the first quarter despite some challenges related to the storms in the southeast in February. In addition, the food service business is recovering as pandemic restrictions are eased. The company’s retail and QSR operations also remained strong in solid demand conditions. The prepared food business in the United States continues to gain momentum. The large bird cutting market also saw improvements in the market.
We anticipate that Pilgrim’s Pride will continue to benefit from the improvement in market and operational scenarios in all markets as the pandemic-related deficiencies due to mass vaccination gradually subside. This Zacks Rank # 3 (Hold) company’s stocks are up 16.1% over the past six months, compared to the industry’s 8.4% gain.
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