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Sanderson Farms, Inc. Reports Third Quarter Results for Fiscal 2005

by 5m Editor
23 August 2005, at 12:00am

US - Sanderson Farms, Inc. (NASDAQ/NM: SAFM) today reported results for the third fiscal quarter and nine months ended July 31, 2005.

Sanderson Farms, Inc. Reports Third Quarter Results for Fiscal 2005 - US - Sanderson Farms, Inc. (NASDAQ/NM: SAFM) today reported results for the third fiscal quarter and nine months ended July 31, 2005.

Net sales for the third quarter of fiscal 2005 were $264.6 million compared with $293.9 million for the same period a year ago. For the quarter, the Company reported net income of $24.0 million, or $1.19 per diluted share, compared with $33.9 million, or $1.69 per diluted share, for the third quarter of fiscal 2004.

Net sales for the first nine months of fiscal 2005 were $757.1 million compared with $793.1 million for the first nine months of fiscal 2004. Net income for the first nine months of fiscal 2005 totaled $60.6 million, or $3.01 per diluted share, compared with $86.4 million, or $4.33 per diluted share, for the first nine months of last year.

"We delivered a solid performance for the third quarter of fiscal 2005," said Joe F. Sanderson, Jr., chairman and chief executive officer of Sanderson Farms, Inc. "Market prices for all poultry products except for leg quarters were lower than the record high prices we experienced in the third quarter of last year. However, we enjoyed lower feed costs and have continued to maintain a favorable product mix between the retail market and the big bird deboning market. Start-up costs associated with the new poultry complex in Georgia for the third quarter and nine months ended July 31, 2005, were $0.07 and $0.12, respectively, net of income taxes. These costs are included in selling, general and administrative costs in the accompanying financial statements."

According to Sanderson, as measured by a simple average of the Georgia dock price for whole chickens, prices were lower by approximately 6.3 percent in the Company's third fiscal quarter compared with the same period in 2004, but increased 0.8 percent for the first nine months of the fiscal year compared with the year-earlier period. Boneless breast meat prices during the quarter averaged 41.0 percent lower than the prior-year period, and averaged 27.7 percent lower for the first nine months of the year compared with the prior year. Wing prices averaged 96.8 cents per pound through the first nine months of the fiscal year, down 11.2 percent from the average of $1.09 per pound for the first nine months of fiscal 2004. The average market price for bulk leg quarters increased approximately 25.4 percent for the quarter and 6.5 percent for the nine-month period in fiscal 2005 compared with the same periods last year. This trend in leg quarter prices reflects stronger export demand, primarily from Russia, but also from other parts of the world. At the same time, market prices for corn and soybean meal, the Company's primary feed ingredients, declined 18.3 percent and 24.2 percent, respectively, compared with the third quarter a year ago.

"We reached an important milestone yesterday as we began processing chickens at our new facility in Moultrie, Georgia," added Sanderson. "We are pleased with the efforts of our employees and contract growers who worked to bring this facility online, on time and on budget. The Georgia facility will be dedicated exclusively to serving retail customers, and this new state-of-the-art poultry complex is closer to our growing list of customers located in the Southeast. The additional capacity from the new facility, together with the additional pounds generated as a result of the ongoing conversion of the Collins, Mississippi, plant to a larger weight bird, will allow us to increase our overall production by about 26 percent when both projects are complete. We are excited about the growth opportunities ahead as we continue to bring both of these projects up to full capacity.

"We remain optimistic about our prospects for the remainder of fiscal 2005. While severe hot and dry weather conditions in certain parts of the country have created uncertainty regarding the size of this year's crop of corn and soybean in the United States, we have continued to enjoy lower costs this fiscal year when compared with last year. As projected, we expect to reduce our grain costs by approximately $60 million to $65 million for fiscal 2005 compared with 2004. While these commodity prices are somewhat unsettled at this time, we will continue to monitor pricing trends with respect to evaluating our cost structure for fiscal 2006. Overall, poultry market conditions remain favorable with good consumer demand and expected continued growth in volumes for exports. We are pleased with the momentum in our business and look forward to completing another successful year," Sanderson concluded.

Sanderson Farms will hold a conference call to discuss this press release today, August 23, 2005, at 10:00 a.m. Central, 11:00 a.m. Eastern. Investors will have the opportunity to listen to a live Internet broadcast of the conference call through the Company's Web site at www.sandersonfarms.com or through www.earnings.com. To listen to the live call, please go to the Web site at least 15 minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, an Internet replay will be available shortly after the call and continue through September 23, 2005.

Sanderson Farms, Inc. is engaged in the production, processing, marketing and distribution of fresh and frozen chicken and other prepared food items. Its shares trade on the Nasdaq Stock Market under the symbol SAFM.

This press release contains forward-looking statements based on management's current views and assumptions. Actual results and events may differ. For a discussion of these matters, please refer to the "Cautionary Statement Regarding Risks and Uncertainties That May Affect Future Performance" in Item 7 of the Company's 2004 Annual Report on Form 10-K and please refer to the cautionary statement found in Management's Discussion and Analysis of Financial Condition and Results of Operations under the heading "General" in Part I, Item 2 of the Quarterly Report on Form 10-Q for the Company's third quarter ended July 31, 2005.

Source: Sanderson Farms Inc - 23rd August 2005

5m Editor