Sara Lee/ Poultry News From Meatingplace.com

Strong retail meats performance fails to reverse Sara Lee loss
By Ann Bagel Storck

Despite strong results from its North American Retail segment, which includes the Hillshire Farm, Jimmy Dean and Ball Park brands, Sara Lee Corp. on Thursday reported a loss for the third quarter, ended March 27.

Adjusted operating income for North American Retail rose 47.9 percent, and net sales for the segment were up 4.1 percent in the quarter, Sara Lee said.

However, overall the Downers Grove, Ill.-based company reported a third-quarter loss of $336 million, or 49 cents per share, compared with a profit of $165 million, or 24 cents per share, during the same period a year ago.

Revenue for the quarter was flat, at $2.58 billion.

Excluding a tax charge and other items, Sara Lee earned 29 cents per share. Analysts predicted the company would earn 21 cents per share on revenue of $2.71 billion.

Sara Lee did raise its profit projections for the year, to $1.06 to $1.10 per share from $1.02 to $1.07 per share.

Shares of Sara Lee were trading at $13.59, down almost 3 percent, in midday trading on the New York Stock Exchange.

Pilgrim’s ramp-up stirs supply worry; Tyson, Sanderson shares hit
By Meatingplace Editors


Shares of Tyson Foods and Sanderson Farms slumped Thursday along with Pilgrim's Pride after the latter said it would raise output by restarting three chicken plants idled in the recession (See Pilgrim's Pride to re-open three plants, boost production by 10 percent, Meatingplace, May 6, 2010.), prompting concern the industry risks expanding supply too quickly.

Pilgrim's shares sank 24 percent to $8.45, Sanderson fell about 8 percent to $53.06 and Tyson shed about 5 percent to $18.41.

"There seems to be heightened sense of fear for the chicken industry," said BMO Capital Markets analyst Kenneth Zaslow.

Wall Street analysts asked several questions on Pilgrim's first-quarter earnings call after the announcement to probe further the company's rationale for boosting production as the U.S. economy slowly gets back on its feet.

Excess supply hurt the industry as the economy slid deeper into recession and helped push Pilgrim's into bankruptcy in December 2008. After shuttering several facilities and selling a majority stake to JBS SA of Brazil, Pilgrim's emerged from bankruptcy protection this past December.

Industry getting ahead of itself?

On the call, Pilgrim's Chief Executive Don Jackson defended his plans to re-open three plants over the next two years, asserting the industry is not getting ahead of itself. The first to re-open will be a big-bird deboning facility in Douglas, Ga., in January 2011.

"We believe that the demand is there," Jackson said. "If you look at all of those increases, ours as well as the rest of the industry, I still think those increases are consistent with what we and the industry are seeing by way of demand."

In addition to Pilgrim's expansion, Sanderson Farms is constructing a new poultry complex in Kinston, N.C., and has said it wants to build a new big-bird deboning facility in Goldsboro, N.C. (See Sanderson firms plans for new poultry complex in N.C., Meatingplace, March 30, 2010.) Smaller processors have also announced expansion plans.

Jackson said Pilgrim's, which reported a first-quarter loss on Thursday, is not keeping up with the rest of the industry on pricing but expects to be able to raise prices and fix that problem this year.

Poultry industry fundamentals are positive, he said, including improving demand, higher market prices for most chicken products that could hold up through fall, higher prices for competing proteins, lower feed costs compared with a year ago and continued tight supplies and low cold storage inventories.

"My general belief is that the economy is going to begin to strengthen, and I think that will help maintain demand and price going forward," Jackson said.

Zaslow said it would be unrealistic to expect chicken production not to increase given that demand is improving and there is now potential for recovery in the foodservice sector.

"In our view, the increase appears relatively in line with likely demand," Zaslow said.

Kosher poultry brand sold amid losses
By Tom Johnston


Hain Pure Protein Corp. said Thursday in a news release the company will sell its Kosher Valley poultry brand to Empire Kosher Poultry Inc. In a quarterly report released Wednesday, Hain said it lost nearly $701,000 on the Kosher Valley brand in the first three months of 2010.

Empire will process Kosher Valley product at its plant in Mifflintown, Pa., while Kosher Valley's plant in Plainsville, N.Y., according to a report by the Post-Standard newspaper, will shut down for at least six months.

HPPC, a joint venture between Pegasus Capital Advisors L.P. and Hain Celestial Group Inc., launched the Kosher Valley line — including chicken and turkey products certified as kosher, antibiotic-free, vegetarian-fed and humanely raised — a little more than a year ago. Kosher Valley products were sold in upscale supermarkets such as Whole Foods Market.

Hain Celestial, according to the Post-Standard, had bought the Plainville plant from the Bitz family for $26.3 million in 2007. Most of the Plainville facility's more than 100 workers were laid off in early 2009 when the plant was retooled to handle kosher processing of chickens and turkeys. Turkey processing under the Bitz family was transferred to a plant in New Oxford, Pa. At the time, the new owners said the shift would result in cost savings, the report says.

In the news release announcing the sale of Kosher Valley, HPPC and Empire said the combination of the two brands will provide operating efficiencies. Rabbi Yechiel Babad and the Orthodox Union will continue to provide kosher certification on the Kosher Valley line.

"We are delighted that this combination will expand the breadth of the product lines and their distribution reach," Irwin D. Simon, director of HPPC, said in the release. "Empire has been a premier brand in kosher poultry for many years, and Kosher Valley will benefit greatly from Empire's production capabilities and reputation for delivering high-quality products to a broad market. Hain Pure Protein has made significant investments over the last year in building Kosher Valley into the strong brand that it is today."

Under the terms of the letter of intent, Simon and Rodney Cohen of Pegasus Capital Advisors are expected to join Empire's board of directors. Other terms of the transaction were not disclosed.

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