Pilgrim's Pride Corporation (PPC) Earnings Call Transcript & Summary

Good morning, and welcome to the Second Quarter of 2026 Pilgrim's Pride Earnings Conference Call and Webcast. [Operator Instructions] At the company's request, this call is being recorded. Please note that the slides referenced during today's call are available for download from the Investors section of the company's website at www.pilgrims.com. [Operator Instructions] I would now like to turn the conference call over to Andrew Rojeski, Head of Strategy, Investor Relations and Sustainability for Pilgrim's Pride.

Good morning, and thank you for joining us today as we review our operating and financial results for the second quarter ended on June 28, 2026. Yesterday afternoon, we issued a press release providing an overview of our financial performance for the quarter, including a reconciliation of any non-GAAP measures we may discuss. A copy of the release is available on our website at ir.pilgrims.com, along with slides for reference. These items also have been filed as Form 8-Ks and are available online at sec.gov. Fabio Sandri, President and Chief Executive Officer; and Matt Galvanoni, Chief Financial Officer, will present on today's call. Before we begin our prepared remarks, I would like to remind everyone of our safe harbor disclaimer. Today's call may contain certain forward-looking statements that represent our outlook and current expectations as of the day of this release. Other additional factors not anticipated by management may cause actual results to differ materially from those projected in these forward-looking statements. Further information concerning these factors have been provided in yesterday's press release, our Form 10-K and our regular filings with the SEC. I would now like to turn the call over to Fabio Sandri.

Thank you, Andy. Good morning, everyone, and thank you for joining us today. For the second quarter of 2026, we reported net revenues of $4.6 billion with an adjusted EBITDA of $360 million. Our adjusted EBITDA margin was 7.8% compared to 14.4% last year. During the quarter, chicken demand remained firm across all regions, leading the growth in meat protein consumption. Equally important, we continue to drive growth projects to strengthen our portfolio, drive sales growth and enhance margins. In the U.S., demand for chicken continued to grow in both retail and foodservice. Operations improved compared to previous quarter given the completion of our plant upgrades and progress in the efficiency of our live operations. Volumes to key customers in Fresh remained steady, whereas prepared grew double digits as Just Bare continued to lead growth and velocity in the frozen fully cooked category. In Europe, poultry and ready meals drove overall sales growth as their affordability and convenience resonated with value-conscious consumers. Margins were compressed given competition from imported pork into U.K. and increased costs driven by the Middle East conflict. Mexico also increased volumes compared to last year, driven by exceptional growing environment for birds. We continue to grow our branded offerings in both fresh and prepared, and the previously announced growth and diversification projects all remain on schedule. We continue to focus all aspects in the environment, social and governance matters within sustainability. Our approach to team member development and retention were recently recognized across regions for the workplace satisfaction, including America's Greatest Workplace by Newsweek in the U.S., Employer of the Year by The Grocer in Europe and Exceptional Companies Award by the Institute for the Promotion of Quality in Mexico. Turning to supply in U.S. USDA reported ready-to-cook production increased 4.5% over same period last year from higher headcount and modestly higher live weights. Egg sets rose 2% from improved layer flock productivity, where chick placements grew 2.4% from moderate improvements in hatchability. A significant part of the growth came from much better livability than previous years. Given the size of the layer flock, recent pullet placements and production environment, the USDA anticipates chicken production growth to slow down in the second half of the year to around 2.5%, closing the year at 3.3%. As for other proteins, USDA expected limited growth in pork, along with a minor increase in beef availability as higher imports partially offset domestic production headwinds. When these factors are combined with increased chicken supply, USDA estimates overall net protein availability will increase by 2.2% compared to last year. Within the U.S., the affordability of chicken provided a great option to household budgets pressured by persistent inflation and elevated energy prices. As a result, chicken continued to be resilient as volumes increased across both retail and foodservice channels. In retail, the fresh meat department posted dollar sales growth across all major proteins. From a volume standpoint, chicken delivered the highest growth among all proteins compared to the same period last year. Boneless skinless breast volumes increased year-over-year as pricing remained steady and the spread versus ground beef remained at record levels. Boneless skinless dark meat continued to deliver strong growth as volumes rose compared to the first quarter of 2026. In deli, consumer demand for convenience, ready-to-eat options drove growth in rotisserie WOGs and cutup portions. Sales and volumes for appetizers, including popcorn chicken and wings also rose compared to the same period last year. Demand for convenience and value also permeated the frozen prepared category as chicken grew compared to last year. Within foodservice, chicken volumes remained positive despite mixed industry performance and traffic trends as operators continue to expand chicken as a value-oriented protein offering. Overall, foodservice volumes increased despite continuous concern about foot traffic with chicken gaining menu penetration. QSR and noncommercial channels presented the largest growth with chicken-focused chains lead growth in QSR. Despite continued healthy growth in chicken across all channels, demand was more than offset by the increase in supply. As a result, counter-seasonal movements emerged in the commodity chicken market, lowering cutout values compared to previous quarter. In exports, overall poultry exports remained steady compared to last year as trade flows continue to navigate through a variety of circumstances. Our volume growth was strong, and we outpaced the channel through an increased presence in several key markets. Within the Middle East, trade to GCC countries continue to flow through alternative [ ports ], giving a comprehensive inland transportation network, enabling a resilient supply chain. For Asia, recent meetings between government officials from the United States and China created a favorable outcome for the U.S. poultry exports. As such, China released 17 states from its avian influenza ban, allowing shipments of raw products to resume. Additional opportunities exist as other states that are currently free of high path avian influenza have yet to be fully recognized. Further meetings scheduled later in the year may result in the release of these states and resumption by China to follow the Phase 1 agreement. Turning to feed. Corn was volatile throughout the quarter. Early in the period, concerns about disrupted fertilizer supply and higher energy costs associated with the Middle East conflict elevated prices. Corn markets eventually fell given favorable U.S. planting weather, higher level of U.S. planting acreage relative to the forecasted expectations and better-than-expected production in South America. Looking ahead, higher risk premiums for corn may emerge pending outcomes in the Middle East and reactions by China to potential trade policy changes by the U.S. Nonetheless, yields for the U.S. crop, along with weather in the Midwest will be the key drivers for corn pricing in the short term. The soy complex shows similar volatility given the Middle East conflict, along with additional uncertainty from the pace and volume of Chinese purchases of U.S. soybeans. Another year of record soybean production in South America, along with increased soybean acreage in the U.S. versus last year, reinforced healthy stock levels. Given the potential of increment buys of U.S. soybeans by China, a risk premium will continue to exist within the soy market. Soybean oil continues to be the stronger leg of the soy complex, keeping the soybean meal price relatively lower. In wheat, global stocks remain at comfortable levels despite a decline in production from all-time high last year. Availability may be further enhanced later this year as U.K. anticipates a production increase of 25% versus prior year. However, recent concerns regarding shipments in the Black Sea given the conflict between Ukraine and Russia may trigger an increase in price. In the U.S., investment in converting our plant in Russellville to a case-ready operation to further strengthen key customer partnerships was completed as planned. We also continue to improve our sales mix given the recent installation of dark meat deboning and portioning equipment in several big bird plants. Given this work, our portfolio was more prepared to manage the counter-seasonal declines in commodity cutout values, enhancing profitability from the first quarter. In Fresh, volumes grew compared to the same period last year. Margins expanded from the previous quarter given the completion of the plant upgrades and continued improvements in live operations. Case-ready volumes rose compared to last year from incremental distribution and stable velocity throughout retail. We also secured several promotional events with several leading retailers to further drive demand during the next quarters. Small birds also grew as volumes to key customers exceeded channel averages. Our big bird plants provided additional product to support the growth of prepared foods, mitigating the impact of commodity market declines. To support the growth of our key customers, we recently announced the investments in Ellijay, Georgia to expand production and do more deboning of small birds. Based on this work, we will further align our portfolio to meet the fast growing boneless chicken categories such as chicken sandwich and tenders. Momentum to further diversify our portfolio through prepared foods continue to accelerate. Overall volumes increased nearly 14% compared to the same period last year. Retail sales of Just Bare increased over 30%, 6x the category average. We also received additional recognition for the taste and quality of Just Bare as recent survey of chefs by the Allrecipes named nugget one of the best in the category. Given its extensive growth and consumer acceptance, it has achieved nearly 15% market share, making it the second largest brand in frozen fully cooked. We continue to drive growth of our branded presence in retail through innovation. To that end, we have created expansions to expand Just Bare presence across different occasions and consumer segments. Similarly, we are securing partnership to deliver and launch new flavor offerings through the retail and club for the Pilgrim's branded in retail. We are building further awareness of our superior taste and culinary focus of the broader Just Bare fresh prepared portfolio through media partnerships. Recently, our innovation was featured on the award-winning television series, The Bear, and further supported by selected dining experience, meal kits and press coverage. Based on this work, we've generated over 950 million earned media impressions. In foodservice, we continue to increase our presence of branded offerings as market share has increased in both commercial and noncommercial channels. Moving forward, we will continue to cultivate our presence through innovation, digital engagement and new product development. Our investment in the Walker County, Georgia to further support our growth remains on track with commissions slated for the second half of 2027. In Europe, our diversified portfolio continues to adapt to meet evolving marketplace needs. The affordability of our poultry and meals resonated with inflation-strapped consumers as each were among the fastest growing categories in retail. Our volumes to key customers rose faster than both at the grocery channel averages and prior year, reinforcing our partnerships. In the branded segment, volume in the Rollover grew double digits and garnered significant retailer acceptance and consumer interest. Fridge Raiders remained relatively steady as additional distribution was secured throughout grocery, enabling further growth for the remainder of the year. While Richmond's margins remain attractive, the pace of volume growth lags our expectations as extensive promotion activity, along with significant retailer support of premium private label offerings has intensified competition pressures. Given Richmond's market presence and further profitability growth potential, we will continue to emphasize sales execution, investment in brand building and drive innovation. In foodservice, QSRs continue to experience declines in store visits, resulting in lower volumes and sales. We will continue to work closely with leading foodservice providers to expand our portfolio of value-focused offerings, generating additional traffic. Despite increasing costs from the Middle East conflict and competition from imported pork into the U.K., overall profitability was comparable with last year. Within pork, continued reductions in the existing herd along with further diversification in prepared should alleviate margin pressures. In addition, our pricing arrangements for customer-specific offerings allow for recovery from raw material escalation. Turning to Mexico. The country experienced a counter-seasonal very positive growing environment for birds. As a result, production expanded from elevated livability and higher live weight. Increased production of domestic eggs and additional pork imports further grew overall protein availability in the country. Nonetheless, demand for chicken was very strong, absorbing the additional supply. We continue to grow our differentiated branded offerings. In Fresh, volumes of retail branded products grew over 30% compared to last year. Just Bare once led the growth as volumes increased over 2.5x. Prepared Foods offerings continue to gain marketplace traction as volumes rose across retail and foodservice. Pilgrim's branded offerings led growth as volumes grew double digit across both channels. Operational excellence efforts made significant progress given improvements in productivity and live operations, further enabling our business to navigate these challenging market conditions. We continue our investments to drive sales growth and reduce the volatility of our portfolio. To that end, we completed our expansion of the prepared plant -- prepared line at Porvenir and started production as scheduled. Our investments in live in the Southern Peninsula are also on track and ramp-up continues. We continue to emphasize all aspects of sustainability throughout our operations. As part of this effort, we've made repeated investments in team member training to reinforce our values throughout our organization, build technical skills and develop management capabilities. Given our continued focus, we've been recognized as a leader in workplace satisfaction across multiple publications, including Newsweek in the U.S., The Grocer in Europe and Institute for Promotional Quality in Mexico. With that in mind, I'd like to ask our CFO, Matt Galvanoni, to discuss our financial results.

Thank you, Fabio. Good morning, everyone. For the second quarter of 2026, net revenues were $4.63 billion versus $4.76 billion a year ago, with adjusted EBITDA of $360.0 million and a margin of 7.8% compared to $686.9 million and a 14.4% margin in Q2 last year. Adjusted EBITDA margins in Q2 were 8.7% in the U.S. compared to 17.1% a year ago. For our Europe business, adjusted EBITDA margins came in at 7.6% for Q2 compared to 8.2% last year. In Mexico, adjusted EBITDA margins in Q2 were 3.9% versus 16.3% a year ago. U.S. net revenues were $2.65 billion versus $2.82 billion a year ago. Adjusted EBITDA in the U.S. for Q2 came in at $231.5 million compared to $482.7 million last year. U.S. margins declined year-over-year primarily due to the 27% decrease in jumbo cutout value. However, sequentially, U.S. margins improved while both lapping the impacts of significant plant downtime in the first quarter and through improved performance in our live operations. U.S. Prepared Foods continues to demonstrate robust growth with year-over-year volumes increasing nearly 14%. In our U.S. GAAP results, we incurred legal settlement expenses of $136 million in the quarter, primarily due to reaching settlements with certain parties associated with the ongoing broilers litigation. Also, we took a $26 million charge in the quarter, primarily related to an asset impairment associated with our previously announced forthcoming shutdown of the harvesting facility in Chattanooga. In Europe, adjusted EBITDA in Q2 was $105.8 million versus $111.8 million last year. The business benefited from strength in poultry and meals offerings during the quarter, along with the continued benefits of its structural reorganization. The strength in poultry and meals helped compensate for pressured pork margins due to higher European imports in the U.K., increased costs driven by the Middle East conflict and decreases in foodservice traffic. Mexico generated $22.6 million in adjusted EBITDA in Q2 compared to $92.3 million last year. As Fabio mentioned earlier, Mexico's results were impacted by year-over-year changes in bird growing conditions, increasing supply in the live markets and lower-priced competing proteins. SG&A costs in the quarter were higher year-over-year, primarily due to an increase in legal settlement and defense costs. However, these costs were partially offset by lower incentive compensation accruals and marketing expense during the quarter. Our effective tax rate for the quarter was 39.3%. However, our year-to-date effective tax rate is 25.3%. We continue to anticipate that the full year effective tax rate will approximate 25%. We have a strong balance sheet, and we continue to emphasize cash flows from operating activities, management of working capital and disciplined investment in high-return projects. During Q2, we completed a $250 million tender offer of our 2033 bonds. At the end of the quarter, our net debt totaled less than $2.5 billion with a leverage ratio of 1.43x our last 12 months adjusted EBITDA. We had nearly $1.6 billion in total cash and available credit at the end of the quarter. GAAP net interest expense for the quarter totaled $46.1 million. However, excluding the loss on the early extinguishment of debt, our net interest expense was $28.5 million. Excluding the impact of early extinguishment of debt, we anticipate our full year net interest expense to be approximately $115 million to $120 million. We spent $230 million in CapEx in the second quarter. The spending this quarter included the finalization of the Russellville conversion, continued progress in our new prepared foods plant in Georgia and the investment in Ellijay, Georgia to enhance our mix in support of key customers in the foodservice space. At this time, we maintain our full year CapEx estimate of approximately $900 million. These near-term growth projects align to our overall strategies of portfolio diversification, focus on key customers, operational excellence and our commitment to team member health and safety. Operator, this concludes our prepared remarks. Please open the call for questions.

[Operator Instructions] And our first question here will come from Ben Theurer with Barclays.

Just real quick, maybe digging into your expectations for the second half and if you could help us maybe understand a little bit what you're seeing in terms of supply as it relates to the U.S. market and how it should impact third and fourth quarter. You flagged in the presentation a little bit of an uptick, if you want to call it an uptick, at least a little bit on some of the pricing, particularly on wings from this like very low levels, slightly more improving, but tenders still being very much down on a historic basis. So as we think about the cutout value and how that flows into that business that is more commodity price exposed for you guys, what are your expectations in terms of just how it's going to flow through into profits for the third and the fourth quarter? That would be my first question. And I have a very quick follow-up.

Yes. As we mentioned, we saw a significant increase in supply during Q2, 4.5%. I think the initial expectation was a little lower than that. What we saw was we started with the egg sets and the industry set 2% more eggs in the quarter. We expected a little bit better management, and we saw that a little bit improve in the hatchability. So the chick placements were 2.4%. I think what was different this quarter is that we saw an improvement in the growing conditions of the birds, and the livability was significantly better than last year. As you remember, last year, we have a lot of issues in the industry with the respiratory diseases and low path AI. So we saw some more mortality. And this livability actually translated into more than 1% increase in total supply. So the headcount was a little higher than everybody anticipated, and that is what created a 4.5% growth in the supply in Q2. Coming to Q3 and Q4, starting with the breeding flock, I think we saw the same number as last year. So we don't expect a significant improvement in number of eggs. So I think it's all about the increase in egg sets and how that will translate into ready-to-cook pounds. We don't expect that effect of increased livability for Q3 and Q4 as those issues were more concentrated in Q2. We're also seeing a little bit of warm weather, which typically impacts the growth of the birds, especially now in July, August. So we're expecting and USDA is expecting growth in the second half to moderate. For the third and fourth quarter of 2026, the USDA is expecting 2.5% increase in the supply, which is more in line with the strong demand that we are seeing for chicken. I think when you go to the pricing, and you need to go into individual segments and into individual pieces, I think first, we'll start with overall trends that are happening in the consumer, right? I think we're seeing several trends and changes in the environment that are supporting the demand for chicken in both retail and foodservice. Starting with the foodservice, I think we are seeing the fight for traffic. Foodservice is struggling with traffic, and because of that, they are focusing on promotional activities. And we're seeing that they're using chicken for those promotional activities to generate traffic. That's why we saw an increase of 3.1% in -- 3.4% actually in the volume of chicken in the foodservice category. And then we see the retail, where consumers are strapped for money. They are looking for a control over their budgets, and they're going to the retail to buy protein. We saw a growth in retail of 2.8% on the chicken category, especially on the prepared side, where we've seen our brands really resonating with the consumer on the prepared, on the Just Bare. Consumers are looking for affordability and also for convenience. So we saw significant growth in prepared, but we saw some significant growth in fresh as well with the industry or the volume in chicken growing by 1.8%. Going more specifically into the cuts, right, we saw the wings bouncing back after getting off the menus on the foodservice, and we are seeing some increase in availability in wings in retail. So we expect wings demand to continue to increase, especially starting now the football season and the basketball season. I think on the boneless breast, we've been talking about this for more than a year right now, right? The delta between ground beef and boneless breast continues to widen, and I think it's the highest it's ever been. I think that is helping the demand for boneless breast. And more important than that, we are seeing some significant promotional activity on the retail coming into the fall and coming into the next months. That is happening because I think the retail is also looking for foot traffic. They're also increasing their promotional activity, and boneless breast has been a significant and important part for that. On the boneless dark meat, we're also seeing some great trends with changing demographics and changing culinary preferences, and boneless dark meat has been the fastest growing category in the retail. So we're seeing some very positive trends overall for protein and for chicken in special, both in foodservice and retail. And that can help for the pricing and for the demand as long as the supply is in line with what we expect.

Okay. Perfect. And then one real quick one for Matt probably. As it relates to the CapEx cadence, I mean, I think you just said $900 million for the year. Initially, it was $900 million, I think, to $950 million. So should we assume closer to the lower end of that just given the run rate of the projects? Or is there anything that you've kind of like postponed? Or what's driving that guidance more to the lower end of the previous guidance for the CapEx versus what was $900 million. to $950 million?

Yes. No, sure. I think year-to-date, we're at $465 million, and kind of looking at the $900 million, we have a lot of the projects that kind of gone through already with all the Russellville conversion, some of the other plants we have. Of course, we've got continuing spend on Walker County with the new prepared foods plant and then with Ellijay, but we've got some of the bigger projects behind us and spent in the first half of the year. So at $465 million, my guide at $900 million kind of just gets you kind of almost equal first half, second half but maybe just slightly below in the second half compared to the first half of the year.

And our next question will come from Peter Galbo with Bank of America.

Maybe to follow up to Ben's initial question and ask it slightly differently. Fabio, I know you gave a very comprehensive answer. But just is there an expectation that as we get closer to the fall that we might see the industry kind of go through its normal seasonal cuts on production? I know that, that was obviously last year kind of something that didn't happen that typically, again, we would expect to happen seasonally. So just given where the commodity markets sit, like are we in a more normal environment this year where production cuts are kind of expected for the industry?

Yes, it's normal for the industry to do the seasonal cuts. As we all know, our industry always produced to the expected demand, and during the fall given the Thanksgiving and other events, we don't see a strong demand for chicken. So it is normal to have that seasonal cuts. Last year, I think they waited a little because of the high prices that we were seeing during the -- especially in the commodity segment in the second quarter last year. But the seasonal cuts always happen, and they start around the end of August and September. So our industry always produces to the demand. Like I mentioned, I think it was unexpected or it was welcome but an unexpected increase in livability that we had in Q2 because the exits were only increasing by 2%, which was in line with the expected demand growth that we have for chicken for the whole year. I think the livability was what increased the production a little bit over what the industry was expecting. And I cannot speak for the industry as well, again, but for Pilgrim's, we will always adjust our production to demand for our key customers. And I think you mentioned one important point, which is the portfolio, right? As we always mentioned, we have a differentiated portfolio. We have the small birds. We have the case ready, the big birds and the prepared foods, and we're seeing some strong growth in the prepared foods. So -- and with all the investments we did in the big bird plants, a big portion of our production is using on the growth of our prepared foods, especially on the portion side. So I think that's also important. But overall, long story short, our industry will always adjust the demand to the expected -- the production to the expected demand.

Great. Okay. Maybe if I could ask on Mexico, obviously, a very, call it, dynamic first half with a lot of moving pieces there, and maybe things will start to normalize out in the second half. But if you could give us some perspective on, we've gone through a challenged first half, both from a top line and a profitability perspective, just kind of how that shapes up for the back half of the year.

No, sure. Thank you, Peter. Yes, Mexico, we always mention that Mexico could be very volatile quarter-over-quarter, but it's resilient in double digits year-over-year. I think we're seeing a little bit of a persistent low margins at least to our expectations in Mexico, but the reasons are a little bit different from Q1 than Q2. Typically, what we see in Q2, similar a little bit to what I mentioned in U.S., it is that the growing conditions are not favorable in Mexico. This year, very different from other years. We saw some outstanding growing conditions. So the industry normally increase the sets expecting this worsening or this bad growing conditions. And because of this year, mortality was much lower than expected or livability was much higher than expected. And we saw a significant increase in the supply of chicken in Mexico, almost double-digit increase in volume. At the same time, we are seeing in Mexico the same behavior than U.S. on the egg, on the shell egg. We saw a significant increase in the supply of shell eggs and the consequent reduction in price. And in Mexico, because it is a growing economy and chicken is the entry protein, but egg competes more with chicken than in other countries. So we saw a significant increase in chicken, a significant increase in eggs with a lower price, and we also saw some significant imports on the country of pork from the United States. With all that, we saw a very large increase in the supply of protein in the country. Nonetheless, demand continues to be excellent because we saw that it was able to absorb all this growth in protein, which signifies to us that our strategy of growing in Mexico, it is the right one. We are, as I mentioned, building 2 complexes in the Peninsula and in the South to grow our geographical diversification. And we continue to invest in our brands and in our prepared foods. So the changing in the consumer behavior in Mexico towards more convenience can also be supported with our brands. So I think Mexico, once again, it's very volatile quarter-over-quarter, but we expect very good margins year-over-year given this demand for chicken and for overall protein that continues to grow.

And our next question will come from Ben Mayhew with BMO Capital Markets.

So my first question is around U.S. chicken demand. So you spoke about and referenced ongoing strong demand for U.S. chicken. But we've seen foodservice industry traffic trends soften in recent months, and grocery industry trends remain somewhat soft. So I was just wondering if you could frame the demand side of the equation maybe relative to like 6 to 9 months ago and just how it's evolving out there.

Sure, sure. Yes. I think, again, like I mentioned, I think we need to -- I need to get back to overall trends and changes in the environment. The consumer continues to be looking at their budgets with greater efficiency, and they are strapped in their spending. It's interesting that we look at -- in service, when consumers are asked about the first thing that they will cut from the budget, 75% of the consumer will say that they will cut dining out. So I think that's the foot traffic impact, right? When the budget is constrained, 75% of the consumers will say that they reduce dining out. That will help the demand on retail. And then what foodservice is doing about it, it is increasing the promotions to get this foot traffic that is trying to cut their budgets. And that's where chicken has been winning on the foodservice and increasing menu penetration. I think we're seeing the menu penetration for chicken increasing every single quarter and be used for attracting the consumers. And when you drill down into all the segments in the foodservice, we're seeing the QSRs growing the fastest. Menu penetration and chicken volume in QSRs increased by 4.1%. I think the noncommercial, also, we're seeing a resume of the in-person operations in companies and hospitals and hospitality. We're seeing growth in chicken of 5.9%. The only segment that was stagnant and a little -- just a little bit of growth was the foodservice restaurants, and that's the segment that is being more impacted by these consumers cutting their budgets. And then that helps the chicken on the foodservice despite the weakness in the foot traffic. And then we go to the retail. And like I mentioned, the retail volume has been growing, especially on the prepared side. And when we go for the same survey when the consumers asked what they cut from the budget, 29% saying that they cut from grocery spending, but only 3% say that they are willing to cut meat and poultry consumption. 68% of the consumers say that meat is a nonnegotiable or important item at retail. And that's what we are seeing, this resilient demand for protein and chicken on retail growing by 2.8%. So I think that is the overall consumer sentiment and the several trends that are helping with the demand for protein.

Okay. And my follow-up question has to do with the European U.K. business. The top line continues to actually trend constructively with volumes up almost 1% there. The margins, however, have kind of stagnated. And so I'm just wondering, I know that the pork business has been under pressure, and you're not getting out of it what you maybe have hoped for a couple of years ago when you acquired it. What -- is there any way to quantify like how big of an impact pork is? And is there a time line that you would expect that to recover? And just where do you see this margin profile going from here, from roughly like 5%? And that will be my last question.