Weaker poultry prices pressure Sanderson profits
August 23, 2010
by Keith Nunes
LAUREL, MISS. — Weaker market prices for poultry pushed Sanderson Farms earnings down during the third quarter of fiscal 2010. Net income for the quarter ended July 31 was $36,116,000, equal to $1.55 per share on the common stock, down 16% from $43,048,000, or $2.06 per share, during the same period of fiscal 2009.
Sales for the quarter were $489,096,000, down 3% from sales of $504,846,000 during 2009.
“Sanderson Farms’ financial results for the third quarter of fiscal 2010 reflect favorable market conditions and solid execution in our operations, offset by the effect of the extreme heat on our live operations,” said Joe F. Sanderson Jr., chairman and chief executive officer of Sanderson Farms, Inc. “Market prices for poultry products were lower than last year’s third quarter. Retail grocery store demand has remained strong, although food service demand has remained sluggish, and will likely remain that way until the employment market gains traction and more consumers return to restaurants.
“Overall, our operations continue to run well, resulting in solid operating margins for the third quarter. We were also able to benefit from slightly lower costs for corn and soybean meal, our primary feed ingredients, compared with the same period a year ago. Despite lower grain costs, live production costs were negatively affected by the extreme heat across our production areas. Heat negatively impacts live weights and feed conversions, which in turn results in fewer pounds processed and sold.”
Mr. Sanderson said the development of the company’s new poultry processing complex in Kinston, N.C., remains on schedule.
“We have moved into the hatchery, the feed mill will be completed soon, and we expect to begin processing birds in January 2011,” he said.
For the first nine months of fiscal 2010, net income for Sanderson Farms was $87,020,000, or $3.96 per share. The results compared favorably to the same period during fiscal 2009 when earnings were $62,515,000, or $3 per share. Sales for the period were $1,396,320,000, up 6% from the first nine months of 2009 when sales were $1,320,489,000.