LAUREL, MISS. — "Difficult market conditions" is a refrain that has often been cited throughout the meat and poultry industry as companies report their most recent financial results. For poultry processor Sanderson Farms, the situation is no different. For the third quarter of fiscal 2008, the company recorded a loss of $3,435,000, which compared with net income of $30,680,000, equal to $1.52 per share on the common stock, for the same period this past year.
"Our results for the third quarter of fiscal 2008 reflect difficult market conditions for our industry," said Joe F. Sanderson Jr., chairman and chief executive officer. "While retail and export demand for chicken remained relatively strong during the quarter, casual dining and food service customers have been affected by a significant decline in restaurant traffic due to weak economic conditions and higher fuel prices. At the same time, the markets for both corn and soybean meal have remained high and volatile, resulting in significantly higher feed costs. The combination of much higher costs and the imbalance between domestic supply and demand in the food service markets resulted in much lower margins."
Sales for the third quarter ended July 31 were $466,915,000, which compared with $394,753,000 for the same period the previous year.
"In spite of challenging market conditions, we are pleased with the progress made toward moving to full production at our newest facility in Waco, Texas," Mr. Sanderson said. "While everything will be in place to move to full production at the new plant by October, the plant will operate at approximately 90% capacity until market conditions warrant moving to full production.
"For the remainder of fiscal 2008, we believe market prices will continue to reflect soft consumer demand trends and the uncertain economic outlook. However, having been through volatile cycles, we remain confident that the fundamental rules of supply and demand will work to maintain industry profitability over the long term."
For the first nine months of fiscal 2008, Sanderson Farms had net income of $8,794,000, or 43c per share. For the same period during fiscal 2007, the company recorded net income of $54,762,000, or $2.72 per share. Sales for the period were $1,263,357,000 during the first nine months compared with $1,047,935,000 for fiscal 2007.