A new era
May 1, 2007
A New Era
On Jan. 9, 2007, Pilgrim’s Pride Corp. Completed its Acquisition of Gold Kist Inc., Making Gold Kist a Wholly Owned Subsidiary of Pilgrim’s Pride. the “new” Company Immediately Became the “world’s Leading Chicken Company,” According to a Company Release. Now, Nearly six Months Later, the National Provisioner Asked O.b. Goolsby, President and ceo of Pilgrim’s Pride, for his Opinions on the Progress of the Integration of Gold Kist, the Company’s Recent Financial Results and the Future of the pilgrim’s Pride and gold Kist brands.
Q: From your standpoint, what remains to be finalized in the integration of Gold Kist with Pilgrim’s Pride? Is the process ahead of schedule, behind, or right on schedule? How difficult has the process been thus far?
Goolsby: We’re off to a good start with the integration. Our integration teams have identified more than 90 projects that will help us save money and operate more efficiently. These teams have drilled down into every aspect of our business, from sales and logistics to processing and rendering. They have targeted $100 million in cost savings opportunities that range across the organization. Some of these projects, such as improving our purchasing power or making better use of our huge vehicle fleet, promise attractive savings that can be achieved in a relatively short time. Others will probably take a bit longer to flesh out. But that’s the beauty of a business organized around the philosophy of continuous improvement. Just when you think you know it all, have seen it all, or have done it all, another idea comes along that can save a penny or even a fraction of a penny.
Q: Were there any roadblocks that Pilgrim’s did not expect through the process that you can share? How did Pilgrim’s handle those roadblocks?
Goolsby: Certainly there are challenges that come with any acquisition, particularly one of this size and magnitude. For example, some of the sales contracts that Gold Kist had in place with customers were at below-market prices. It has taken us a while to work through these, but we are confident that over time we’ll be able to pass along cost increases to these customers too. But overall, we haven’t encountered any significant roadblocks during the integration.
Q: What synergies make the two companies such a great fit for each other, from your standpoint? What aspects have made the integration process run more smoothly than you might have anticipated?
Goolsby: We’re confident that the addition of Gold Kist will improve our competitive position over the long-term. This acquisition marked an important milestone for Pilgrim’s Pride and all of our employees. I firmly believe that we’re a stronger, more efficient company today. We have industry-leading market share, a broad and growing customer base, and an impressive portfolio of exceptional brands. It has been exciting to watch employees from both companies learn from each other and work together to chart a new course for the organizations.
Q: What is the long-term strategy involving each company’s brands? Is the plan to keep the brands separate and well-supported, or will Pilgrim’s phase out one or more brands in order to tighten the focus and product line?
Goolsby: That is an issue that we are continuing to work through. We will do whatever makes the most sense for our customers and consumers. In some cases, we may be able to offer similar products under separate brands. For example, Pilgrim’s Pride is the first major chicken processor to offer a premium line of antibiotic-free, air-chilled chicken product. It’s processed at the former Gold Kist complex in Live Oak, Fla. The product has been available for some time at Publix Super Markets under the retailer’s GreenWise Market label and will be marketed by Pilgrim’s Pride to other customers under the Nature Select brand name.
Q: How pleased are you with the financial results that the company has reported thus far this fiscal year? Is the outlook, in your opinion, good for the company?
Goolsby: We’re cautiously optimistic about the second half of the fiscal year. Pilgrim’s Pride has returned to profitability so far in the third quarter, thanks to our production cuts and improved pricing. Looking ahead, the combination of lower industry production levels year-over-year, if they remain in place, and stronger pricing heading into the summer months should lead to continued improvement in our financial results for the rest of the fiscal year.
Q: The National Provisioner visited Pilgrim’s a year-plus ago to coincide with the launch of the all-natural product line. Has that line performed to expectations thus far?
Goolsby: We have had a tremendous response from customers and consumers to the 100% Natural product line. In taste tests, consumers have consistently told us they prefer the product.
Q: What other major maneuvers can we expect from Pilgrim’s in the coming year? Any expansions/additions to product lines in the works?
Goolsby: Our plate is pretty full at the moment. The integration is in full swing and it’s time for us to deliver on the promises we made to customers, employees and shareholders when we bought Gold Kist. The acquisition has positioned us for tremendous growth, and if we focus on taking care of our customers and execute against our strategic plan, everything else will take care of itself.
—Andy Hanacek, executive editor