Sanderson Farm CEO Hinting at Future Pilgrim's Pride Bankruptcy?
The chicken business is so bad that Joe Sanderson, CEO of Sanderson Farms (SAFM), called on divine guidance during his company's recent conference call.
Well that’s going to take a miracle and an angel or something looks to me. I mean if a boneless breast is $1.29 and corn is over… Actually, our corn and soy are booked and they’re booked at very similar prices, maybe a little bit higher than we had for May, June, and July. There’s going to take divine intervention somewhere to make a profit.
We were looking at locking in values at a dead loss, a significant loss. We were looking at $1.30 breast meat and everything else was a loss. I felt like we had big prayer meeting with our advisors and everything...
He expresses a hopeless predicament for Sanderson Farms and other chicken producers in making money in a slow down (worse restaurant sales, likely worsening export markets, no chicken pricing) in the face of killer feed costs:
And the dollar. But I know the chicken people can’t pay $6.50 for corn. I don’t know much about the economics of cattle feeding and hog feeding, but I don’t think they can either and I know chicken people can’t pay $6.50 for corn and $375 for meal and sell chicken and pork and beef for traditional prices. That doesn’t happen. That can’t happen. The economics doesn’t work.
He went on to make a startling prediction that a chicken producer with a large debt on its balance sheet will likely go under in this current nasty high feed environment.
We’re glad, we’re very glad because of our balance sheet that our bankers are not down here visiting us regularly, but they’re visiting some of our friends in the chicken business. We’re glad we’re good operators and our margins, we’re not taking deep losses. But what’s going to happen we believe is these people that are taking deeper losses and whose balance sheets are stretched more than ours and some other people, they’re the ones that are going to have to adjust first, and they’re going to have to adjust more. I don’t know that that means people close or what. I don’t know how it’ll happen or what’ll happen, but that’s the way it’s going to happen.
Although not actually named, it is not hard to figure out which one he is likely discussing: Pilgrim's Pride (PPC). This chicken producer is burdened with a colossal debt of $1.5 billion after making the ill timed acquisition Gold Kist a few years ago. It's burning cash losing $230 million in the last 3 quarters and putting out secondaries in order to try to survive. No other publicly traded chicken producer has this awful a balance sheet -- not Tyson (TSN) or Perdue. Pilgrim's had a fairly dramatic rise, from its low of $11.42 to a high $17.74, on the basis of prayer, not being as big a disaster in losses in the quarter, and what appears to be a very ill timed buying spree by Fidelity driving up the price. I agree with Sanderson: a chicken producer will likely go under. The most probable candidate is Pilgrim's Pride. It will take alot more than prayer to keep Pilgrim's Pride afloat.
Disclosure: Author is short PPC, no position in SAFM or TSN
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This article has 15 comments:
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Henry Weisel
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1 Comment
Aug 27 09:27 AM-
eggtrader
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1 Comment
Aug 27 07:47 PM-
RS2000
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1 Comment
Sep 16 02:03 PM"Just trying to make some money milord"...
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User 262919
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5 Comments
Sep 28 03:29 PMThey are being sued, maybe they are puting on an act, to protect from paying those that are sueing them.
As far as I have heard the bosses talk , that they are doing great, no chanch of closing, though that was last year.
I do not have any sympathy for PPC , however I do the people that need work.
It was the love of power and greed that got PPC and other Companies where they now are , Only prayer and God only can get them out.
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yz450
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2 Comments
Oct 01 03:15 PM-
clukerfker
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1 Comment
Oct 06 04:22 PM-
cknfarmer
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1 Comment
Oct 06 10:20 PM-
SADARR1985
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1 Comment
Oct 08 06:14 PM-
bigmac
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1 Comment
Oct 13 12:54 PM-
Lady
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1 Comment
Oct 15 11:48 AMbigmac - Learn how to spell !!!!!!!!!!!
SADARR1985 - Stop crying about the problem. Do something if what you cliam is true !!!!!!!!!!
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sexy
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1 Comment
Oct 26 06:27 PM-
yz450
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2 Comments
Oct 29 02:29 PM-
User 262919
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5 Comments
Nov 08 07:04 AMOn Oct 15 11:48 AM Lady wrote:
> Pilgrims Pride is a great company to be a parter of. Pilgrims Pride
> will come out on top.
>
> bigmac - Learn how to spell !!!!!!!!!!!
> SADARR1985 - Stop crying about the problem. Do something if what
> you cliam is true !!!!!!!!!!
Its great if you are favored by them,I am talking the Plants Mgrs.
It may vary in different states,I don't do favors to get favors.....
As far as reporting, a lot of good that will do, it has been done a number of times, and all for not.
PPC has bought so many people, they are up to their butt indebted to them, they will be paying money to a lot of people a long time I think.
I read where "BO" wrote out checks on the Senate Floor..
Another thing, FMLA has been revised to help employees whit things that arise at home, or with their own need to be off.. and it no more passes the Senate untill somehow has Lawyers rewriting , puting in LOOPHOLES for Companies, so all the TAX money the hard working people pay our leaders to work and represent us, is tossed in the file 13 can.. well actually we are paying them to work against us, because Companies can buy favors..I assume this because I Know the FMLA LAW gets a loophole somehow.. whats your guess??
Those that made mention of injuries, yes the plant has them to come clock in and sit with broken legs or whatever injury they have, so they can claim a no lost time of work due to an accident, if you come and clock in, it does not have to be reported to OSHA one thing about that, those that come to work, and clock in under duress, can not come against the Plant when there arises complications later from that injury, they were not under COMP.. they were on the clock, you see how they can kill two birds with one stone.
Many accidents, injuries go unreported to OSHA, and even if they are, we know OSHA has been known to take bribes also...
Those that have reported incidents, be they injuries or unsafe working conditions, etc., suffer harassment, intimdations, and have their butt rode untill they quit.
I know, I was one of those employees, I findly quit, because no one would make them stop, they had people that make my life hell, and sad many were employees without backbone, doing whatever needed to do to make their work easier.
I quit, but not one there can say I did not do my job, and was more productive then most, I worked taking care that quality was matched with quanity, I was much older than most of my co-workers, and I worked rings around them, you see , I believed in earning my money.
Soon after geting pushed into quiting, I just desided to retire, and like others that have retired after being bulled out, we are without medical and meds
One day those who do these things will pay dearly for them, in this life, or the next, which by the looks of things it won't be long off " Even So Come Lord Yeshua"
I notice someone said about the faith of PPC;
Well, I have read the backs of PPC Mags. I pay attention to the walk, the talk says one thing, the walk the other..
You have heard "Actions Speak Louder Than Words"
I was FORCED to work on the SABBATH, the word Sabbath means REST.. when I refused to work on the Lords day, I had that day counted against me, so did other Christians.
The Company of PPC does NOT reflect the nature and love of Christ Yeshua, a man of God would NOT force his employees to work on the Sabbath.
Chic-Fil-A has been in bussiness since the early forties, and has NEVER had their employees working on the Sabbath, and he makes more money in six ( 6 ) days than does his compet. in seven ( 7 )
Chic-Fil-A makes many contributions, gives College Scholarships, a real man of God runs his Company like God owns it, because He does, but He will not let the man running it for Him, showing disrespect for His children and ie His Holy Word profit ,God is patient, but after a while He will let you fall, so that you can remember from whence yea came..
PPC might not be in a jam, if they would improve working conditions, update working equipment, treat ALL their employees with the same respect in their attitude and actions toward them, you know fairness goes a long way in the work place, something the Plant I worked for knows nothing about.. ie leting Gods people have the Sabbath off to Rest, for that is what it was made for.
BTW PPC working on Sunday The Lords Day, the Sabbath, that production was not favored by God, and that is the reason they never get ahead, what they do on Sunday will all be for not, or they will lose one days work durning that week, God will not bless a Company that works His people on the Sabbath
God created for six days, the seveth day He made Holy,,,
On the Sabbath man shall do no labor, nor his children, nor his servants, nor his OX nor his Ass, it is the Lords Day, it is Holy unto God.
I guess this scripture went right by "Bo" at least it went by the Plant Mgrs. where I worked.. and I don't recall ever seeing that Verse written on the back of any Pilgrims Pride Mag.
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User 262919
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5 Comments
Nov 08 07:06 AMOn Oct 15 11:48 AM Lady wrote:
> Pilgrims Pride is a great company to be a parter of. Pilgrims Pride
> will come out on top.
>
> bigmac - Learn how to spell !!!!!!!!!!!
> SADARR1985 - Stop crying about the problem. Do something if what
> you cliam is true !!!!!!!!!!
pssss You might want to take your own advice C-L-A-I-M !!!
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IQFStacker
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1 Comment
Nov 16 05:28 PM