LAUREL, MISS. — Sanderson Farms Inc. delivered strong first-quarter results on higher prices for poultry and lower grain costs.
For the first quarter ended Jan. 31, the company reported net income of $66.5 million, or $2.87 per share on the common stock, compared with net income of $28.9 million, or $1.25 per share, in the year-ago quarter. Net sales for the quarter were $667.4 million, a 14% gain over net sales in the first quarter in 2014.
“Our results for the first quarter marked a solid start to the fiscal year,” said Joe Sanderson Jr., chairman and chief executive officer. “Poultry market prices were higher compared to the same period a year ago, and our grain costs were lower. Retail grocery store demand for chicken has remained strong, and it appears food service demand may be benefitting from lower priced gasoline.”
Mr. Sanderson said the Georgia dock price for whole chickens advanced 9.2%, boneless breast meat prices gained 6.6% and the average market price for bulk leg quarters climbed 2.1%. Jumbo wing prices surged 52.2%.
Lower feed costs provided a boost to Sanderson’s results. The company’s average feed cost per pound of poultry products processed decreased 10% to 3.27c per lb, while prices paid for corn and soybean meal, decreased 9.3% and 5.5%, respectively.
“The record corn and soybean crops harvested in the United States last fall sufficiently restocked United States soybean and corn balance tables headed into the 2015 planting season, but market prices for both corn and soybean meal have moved higher since the harvest,” Mr. Sanderson said. “Despite this increase in grain prices, had we priced all of our fiscal 2015 grain needs at yesterday’s prices, our grain costs would be lower by $121 million during fiscal 2015 compared to fiscal 2014, which would translate into a savings of 3.6c per lb processed.”
Mr. Sanderson noted that poultry production is on the rise. He said egg sets have been higher and breeder stock supplies have increased. Mr. Sanderson said American consumers can absorb additional chicken production with continued improvement in macroeconomic conditions and relatively low prices for gas.
Addressing the company’s new facility in Palestine, Texas, Mr. Sanderson said production began Feb. 9.“We look forward to the opportunities the new facility will create as we move to full production over the next year,” Mr. Sanderson added. “We continue our due diligence on sites in North Carolina for our next poultry complex, and hope to complete that process soon. Construction of the new complex will, of course, be subject to various contingencies including final approval by the company’s board of directors.”