Ratings agency Moody's Investors Service downgraded its outlook for chicken producer Pilgrim's Pride to "Negative," citing concerns that weak poultry sales will hurt the company's profits until the second half of 2012.
Moody's said Wednesday it is affirming its overall debt rating of "B2." The company's outlook was "Stable" before the downgrade.
Like other poultry companies, Pilgrim's Pride has been challenged by weak sales and high feed costs. Consumer demand for poultry has been anemic this year, which means companies like Pilgrim's Pride can't easily raise prices high enough to offset more expensive grain costs.
Moody's said the recovery of the poultry business has been slower than it expected and Pilgrim's Prides losses were surprisingly deep this year. Moody's said Pilgrim's Pride will eventually return to profitability, but the company's earnings won't rise strongly until the second half of next year.
Pilgrim's Pride filed for bankruptcy protection after the financial crisis of 2008 because of weak sales and a high debt burden. It was later purchased by the Brazilian meatpacker JBS SA and is now a subsidiary of that company.
Moody's said it is likely that JBS SA would help Pilgrim's Pride financially if Pilgrim's Pride's financial situation deteriorates.
Shares of Pilgrim's Pride rose 7 cents, or 1.3 percent, to close at $5.32.