Pilgrim's Pride trading halted after stock plunges

Wed Sep 24, 2008 6:11 PM EDT

Trading in shares of Pilgrim's Pride Corp., the nation's largest chicken producer, was halted late Wednesday after the stock fell 38 percent and saw volume at more than six times its normal level.

The Pittsburg, Texas-based company was expected to make an announcement to explain the situation by Thursday morning. Messages left for Pilgrim's Pride representatives weren't immediately returned late Wednesday.

Shares in the company fell $3.90, or 38 percent, to $6.36 by the time trading was halted on volume of nearly 13.2 million shares, compared to normal volume of nearly 2.2 million. Earlier in the session, the stock hit a new 52-week low of $6.06. It is off more than 82 percent from its 52-week high of $35.98.

Meat producers are all suffering as the costs for key ingredients like corn are high. The companies can't simply raise prices because an oversupply of meat on the market is keeping prices down. So they're cutting production in a bid to boost prices higher and trying to get a better control on expenses.

Ann Gilpin, equity analyst for Morningstar, said all meat producers are hurting, including Tyson Foods Inc., which makes chicken, pork and beef, and Smithfield Foods Inc., the nation's largest pork producer. But Pilgrim's Pride is the worst off, she said.

"They have a tremendous amount of debt. They've been unprofitable for many quarters and they're in poor financial health," she said. "They're probably the weakest of all the meat packers."

According to the company's most recent annual report, it carried $1.3 billion in long-term debt at the end of 2007, more than doubling from the previous year. The debt was largely due to its $1.1 billion buyout of rival Gold Kist Inc. in early 2007.

Gilpin said the turmoil in the credit markets may be hampering Pilgrim's Pride's ability to do business.

The company hasn't posted a profit in several quarters and executives have said it may take until the summer of 2009 for Pilgrim's Pride it may to return to profitability.

Just this week it announced it was cutting 100 jobs, in addition to 600 positions that have already been eliminated at its El Dorado, Ark., plant. The move, the company said, was to help shore up costs and return to profitability.