LAUREL, MISS. — In addition to reporting its third-quarter earnings Aug. 25, Sanderson Farms Inc. also updated the status of its new plant in Palestine, Texas, which is currently operating near 50% capacity.
“We are on schedule to increase production at the plant again in January 2016,” said Joe F. Sanderson Jr., chairman and chief executive officer of Sanderson Farms. “We expect to reach full production during the second fiscal quarter of 2016.”
Mr. Sanderson also said ground had been broken on the chicken company’s new plant in St. Pauls, N.C., in July. In an Aug. 25 conference call, Sanderson reaffirmed the company’s commitment to grow the business by building new plants in order to increase Sanderson Farms’ stock price.
|Joe F. Sanderson Jr., chairman and c.e.o. of Sanderson Farms.|
“At the end of the day, our job is take a $100 stock and get it to $120 and then get it from $120 to $140,” he said. “We don’t think about (how to be safe) in a down market. We think about increasing the share price. There are two ways we can do that: by running our business efficiently and increasing volume.”
Mr. Sanderson was quick to note the company’s philosophy for investing in new facilities, however.
“We have criteria for doing it,” he added. “We have to have a good balance sheet, we have to be running well and we have to have the people to do it. ... “We won’t do it if something tells us not to do it, like if the economy is tanking. But to get the stock to $140, it’s about building plants. We’re always in the mode of looking for a site, training people and keeping our company running well so we can build another plant.”
While net sales and net income were down for the third quarter, Sanderson Farms reported that net sales and net income are higher for the first nine months of the fiscal year than they were for the same time in 2014. For the third quarter, net income was $50.9 million, or $2.27 per share, compared with net income of $76.1 million, or $3.30 per share, for the third quarter of fiscal 2014. Net sales were $739.9 million compared with $768.4 million for the same period a year ago.
Net income for the first nine months of fiscal 2015 totaled $188.6 million, or $8.28 per share, compared with net income of $155.9 million, or $6.76 per share. Net sales were $2,123.9 million compared with $2,014.0 million for the first nine months of fiscal 2014.
“Sanderson Farms’ financial results for the third quarter of fiscal 2015 reflect continued good demand for fresh chicken at retail grocery stores, which demand was reflected in a Georgia dock whole bird price that remained near record levels during the quarter,” Mr. Sanderson said. “However, market prices for most products produced at our big bird deboning plants were significantly lower during the quarter when compared to last year’s third fiscal quarter.”
Mr. Sanderson said bulk leg quarter prices remain under pressure as a result of weak export demand affected by export bans related to the discovery of avian influenza in the United States, a relatively strong U.S. dollar and lower oil revenue in countries with oil-based economies.“While food service traffic and demand in the United States continue to improve, that demand was not enough to keep pace with additional industry production combined with higher domestic supplies resulting from lower exports,” Mr. Sanderson said. “As a result, market prices for boneless breast meat remained under pressure during the quarter.”