ShapeShapeauthorShapechevroncrossShapeShapeShapeGrouphamburgerhomeGroupmagnifyShapeShapeShaperssShape

In Spite of it All Sanderson Still Turn a Profit

by 5m Editor
23 May 2008, at 1:45pm

US - Net sales for the second quarter of fiscal 2008 were $433.9 million compared with $360.5 million for the same period a year ago. For the quarter, net income was $6.2 million, or $0.30 per share, compared with net income of $26.9 million, or $1.33 per share, for the second quarter of fiscal 2007.

Net sales for the first six months of fiscal 2008 were $796.4 million compared with $653.2 million for the first half of fiscal 2007. Net income for the first half of the year totaled $12.4 million, or $0.61 per share, compared with net income of $24.1 million, or $1.19 per share, for the first six months of last year.

"We are pleased to report a profit during our second fiscal quarter, in spite of challenging industry fundamentals," said Joe F. Sanderson, Jr., chairman and chief executive officer of Sanderson Farms, Inc. "Like others in our industry, the Company's financial results were affected by feed grain costs, which were significantly higher than they were in the same period a year ago, and higher than the first quarter of this year. We expect this trend to continue with feed grain costs projected to remain high and volatile at least through fiscal 2009. Despite these higher costs, we continue to focus on improving the efficiency with which we operate, and the number of pounds we have to leverage into the market to absorb these costs. Overall, we are pleased with the solid performance of our operations in a difficult environment."

According to Sanderson, overall market prices for poultry products were mixed in the second quarter of fiscal 2008 compared with prices a year ago. As measured by a simple average of the Georgia dock price for whole chickens, prices increased approximately 6.1% in the Company's second fiscal quarter compared with the same period in 2007. Bulk leg quarter prices were also higher, up 3.9% compared with last year's second quarter. However, boneless breast meat prices during the quarter were approximately 10.1% lower than the prior year period. Jumbo wing prices averaged $0.97 per pound during the second quarter of fiscal 2008, compared with the average of $1.15 per pound during the second quarter of fiscal 2007, a decrease of 15.4%. At the same time, the Company's costs for corn and soybean meal, the Company's primary feed ingredients, increased 28.3% and 46.8%, respectively, compared with the second quarter a year ago. For the first six months of the fiscal year, these costs have increased 21.7% and 44.4%, respectively.

"We recognize that there are many things about our business over which we have no control, including the higher grain prices and the constant variability in market prices for chicken products," added Sanderson. "While we remain confident that the fundamental rules of supply and demand will work to maintain industry profitability over the long term, we also note that current conditions are creating short-term fluctuations in markets and profitability. Egg sets for early May have been lower than a year ago, which bodes well for future supply."

5m Editor