September, 2009

Meatingplace.com
By Ann Bagel Storck

Crediting demand from casual-dining restaurants, carryout stores, retail groceries and exports, the National Chicken Council reported that chicken wings are selling for more than boneless, skinless breasts.

As of Monday, Sept. 21, wings were selling for a weighted average price of $1.48 per pound wholesale in northeastern U.S. markets, while boneless and skinless breast was selling for $1.13 per pound, according to the U.S. Department of Agriculture’s Poultry Market News Service. The spread of 35 cents per pound in favor of wings is unprecedented, according to Bill Roenigk, senior vice president and chief economist for NCC.

Roenigk said the popularity of Buffalo wings as appetizer items or entrees at casual-dining restaurants is the most important key to the unusual price situation. Also contributing is the growing popularity of restaurants that specialize in chicken wings. The sale of chicken wings through pizza shops and delivery chains is also a factor, Roenigk said.

NCC estimates that this year more than 13 billion chicken wings (2.8 billion pounds) will be marketed as wings (as opposed to the wings on whole chicken or breast quarters). Of these, 9.5 billion wings (2 billion pounds) will be sold through foodservice channels. Another 3.5 billion wings (800 million pounds) will be sold in retail grocery stores.

Meatingplace.com
By Tom Johnston

JBS S.A.’s quick ascent to global stature would not have come without an aggressive streak and some risk. However, it might owe its most recent bid to become the world’s largest protein company, by way of acquiring 64 percent of Pilgrim’s Pride Corp. and merging Bertin S.A., to knowing when to fold when the world economy played a nasty hand late last year.

As Jerry O’Callaghan, the company’s investor of director relations, explained in an interview with Meatingplace, JBS’s careful management of debt amid the economic turmoil was among the primary reasons the company was able to quickly resume its growth plan.

How has JBS been able to emerge so quickly from the global recession?

The feeling we have and thought we had as we progressed through the crisis was that the companies that prepared for the crisis would be the first to emerge healthy afterward. What we decided to do in the second half of last year was to suspend mergers and acquisitions and reduce working capital requirements in order to deleverage as much as possible. We want to be working for the company and not for the bank. That put the company in a very healthy mode during the crisis. As we move out of the crisis, normally there are opportunities, and the healthier the company, the earlier one can maximize the opportunities.

Why was the timing right to do the Pilgrim’s Pride acquisition and the Bertin S.A. merger at the same time?

The way we look at it in terms of timing is that there are cycles companies go through. If you look at Pilgrim’s Pride, from 2006 until recently the company has been on a downhill slide because of economic issues. It’s now on the road to recovery, and we think this is the right moment to make these investments.

Regarding Bertin, it being a merger meant we could have done it at any time, but we think making public the information on both deals at the same time was more logical. Now we have a lot of work to do.

Some have indicated that the Bergin merger is dependent on approval of JBS USA’s initial public offering. Is that true?

No. Bertin is dependent upon a private placement in JBS USA, not the public offering. A private placement is a private equity investment; it’s some institution that makes a decision to invest money in a company in order to gain ownership of a percentage of the company. Bertin depends on that deal being done. It would help because Bertin is a merger, or a share swap, so it would help our balance sheet so the company would not be leveraged after the merger. JBS’s major shareholders…don’t want debt to be more than three times the cash we generate per annum.

Meatingplace.com
by Tom Johnston

All but 60 of 1,400 hourly production workers at the Patrick Cudahy Inc. plant near Milwaukee have returned to work two months after a fire severely damaged the facility, according to the Business Journal of Milwaukee.

The news is good considering the fire damaged a quarter of the plant’s square footage. The company, however, has yet to disclose a final number on the resulting financial impact.

The fire began July 5 when a military-grade flare was shot from a neighboring residence onto the Cudahy plant’s roof.

Brothers Kurtis and Joshua Popp have pleaded guilty to charges related to their parts in starting the fire.