Pilgrim’s Pride Corp. signaled the worst is over for U.S. chicken producers, with an estimate-beating quarterly profit, even as conditions remain “challenging.”

“More restrained” supplies, further easing of restrictions on U.S. exports following a bird flu outbreak and potentially lower grain costs are all expected to contribute to an improved outlook over the next few quarters, chief executive officer Fabio Sandri said July 27 during a call with analysts.

Continued recovery in pricing is needed for the chicken producer to achieve sustainable margin levels, Sandri said.

Chicken producers saw profits slump over the past few quarters as a supply glut and persistently high feed costs were met with sluggish consumer appetites. But Pilgrim’s, which owns operations in North America, the U.K. and Europe, says financial performances during the three months that ended June 2023 improved across all regions when compared with the first quarter even as the company continued to face “challenges in overall protein availability and lingering inflation.”

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Second-quarter earnings, excluding some items, were 44 cents per share, 71% lower than in 2022, the company said July 26. Profits rebounded from extremely depressed levels in the previous two quarters, beating even the highest analyst estimates.

Pilgrim’s Pride, the second-largest U.S. chicken producer, is controlled by Brazilian meat giant JBS SA. The company is the first major meat producer to report earnings. Tyson Foods Inc. and JBS will release their second-quarter results in August.

The company’s stock was little changed as of 10:18 a.m. in New York on July 27.

“Fundamentals still remain on shaky footing in 3Q but are much improved from what we saw earlier in 2023,” Stephens Inc. analyst Ben Bienvenu wrote in a note to clients.