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Sanderson Farms Reports Q3 Results of Fiscal 2008

by 5m Editor
27 August 2008, at 11:07am

US - Sanderson Farms, Inc. has reported its results for the third fiscal quarter and nine months ended July 31, 2008.


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"While retail and export demand for chicken remained relatively strong during the quarter, casual dining and food service customers have been affected by a significant decline in restaurant traffic due to weak economic conditions and higher fuel prices."
Joe F. Sanderson, Jr., chairman and chief executive officer of SandersonFarms, Inc.

Net sales for the third quarter of fiscal 2008 were $466.9 million compared with $394.8million for the same period a year ago. For the quarter, the Company reported a net loss of $3.6 million, or $0.18per diluted share, compared with net income of $30.7 million, or $1.51 per diluted share, for the third quarter of fiscal 2007. The net results for the third quarter of fiscal 2008 include $1.7 million, or $0.09 per share, paid for the settlement of the Company's donning and doffing litigation.

Net sales for the first nine months of fiscal 2008 were $1,263.4 million compared with $1,047.9millionfor the first nine months of fiscal 2007. Net income for the first nine months of fiscal 2008 totaled $8.8million, or $0.43 per diluted share, compared with $54.8 million, or $2.70 per diluted share, forthe firstnine months of last year.

"Our results for the third quarter of fiscal 2008 reflect difficult market conditions for our industry," said Joe F. Sanderson, Jr., chairman and chief executive officer of SandersonFarms, Inc. "While retail and export demand for chicken remained relatively strong during the quarter, casual dining and food service customers have been affected by a significant decline in restaurant traffic due to weak economic conditions and higher fuel prices. At the same time, the markets for both corn and soybean meal have remained high and volatile, resulting in significantly higher feed costs. The combination of much higher costs and the imbalance between domestic supply and demand in the food service markets resulted in much lower margins."

According to Sanderson, overall market prices for poultry products were mixed inthe thirdquarter of fiscal 2008 compared with prices a year ago. As measured by a simple average of the Georgia dock price for whole chickens, prices were higher by approximately 7.0 percent in the Company's third fiscal quarter compared with the same period in 2007, and were higher by 7.9percent for the first nine months of the fiscal year compared with the year-earlier period. Boneless breast meat prices during the quarter averaged 10.7 percent lower than the prior-year period, and averaged 5.7 percent lower for the first nine months of the year compared with the prior year. Jumbo wing prices averaged $0.95 per pound through the first nine months of the fiscal year, down 12.7 percent from the average of $1.09 per pound for the first nine months of fiscal 2007. As aresult of a strong export market, the average market price for bulk leg quarters increased approximately 3.1 percent for the quarter and 10.4 percent for the nine-month period in fiscal 2008 compared with the same periods last year. Cash market prices for corn and soybean meal deliveredto the Company increased 30.7 percent and 52.4 percent, respectively, compared with thethird quarter a year ago, and increased 25.0 percent and 47.3 percent, respectively, for the nine months ended July 31, 2008.

"In spite of challenging market conditions, we are pleased with the progress made toward moving to full production at our newest facility in Waco, Texas," added Sanderson. "While everything will be in place to move to full production at the new plant by October, the plant will operate at approximately 90 percent capacity until market conditions warrant moving to full production. For the remainder of fiscal 2008, we believe market prices will continue to reflect soft consumer demand trends and the uncertain economic outlook. However, having been through volatile cycles, we remain confident that the fundamental rules of supply and demand will work to maintain industry profitability over the long term."

5m Editor