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Sanderson Farms Has Returned to Profitability

by 5m Editor
29 May 2009, at 9:50a.m.

US - Sanderson Farms, Inc. has reported results for its second fiscal quarter and six months ended 30 April 2009.

Net sales for the second quarter of fiscal 2009 were $426.8 million compared with $433.9 million for the same period a year ago. For the quarter, net income was $26.2 million, or $1.27 per fully diluted share, compared with net income of $6.2 million, or $0.30 per fully diluted share, for the second quarter of fiscal 2008.

Net sales for the first six months of fiscal 2009 were $815.6 million compared with $796.4 million for the first half of fiscal 2008. Net income for the first half of the year totaled $19.5 million, or $0.95 per fully diluted share, compared with net income of $12.4 million, or $0.61 per fully diluted share, for the first six months of last year.

"We are pleased to report a return to profitability for Sanderson Farms during the second fiscal quarter of 2009," said Joe F. Sanderson, Jr., chairman and chief executive officer of Sanderson Farms, Inc.

"Our results reflect improved market conditions for the poultry industry and the efficient management of our operations by our managers, employees and contract producers. Much of the market improvement is due to production cuts and resulting reduced supply of chicken in the market. Demand for chicken at retail grocery stores remains strong and the export market improved compared to our first quarter. However, as in the previous two quarters, demand from some food service customers has been adversely affected by the economic downturn, as demand for protein consumed away from home remains soft. We also benefited from lower feed costs during the quarter compared with a year ago," he said.

According to Mr Sanderson, overall market prices for poultry products were higher during the second quarter of fiscal 2009 compared with the first quarter of the year. However, prices were mixed 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 per cent in the Company's second fiscal quarter compared with the same period in 2008. Bulk leg quarter prices were lower by 18.1 per cent compared with last year's second quarter. Boneless breast meat prices during the quarter were approximately 5.0 per cent lower than the prior year period. Jumbo wing prices remained strong and averaged $1.39 per pound during the second quarter of fiscal 2009, compared with the average of $0.97 per pound during the second quarter of fiscal 2008, an increase of 43.0 per cent. The Company's costs for corn and soybean meal, the Company's primary feed ingredients, dropped 22.8 and 14.2 per cent, respectively, compared with the second quarter a year ago.

"We are cautiously optimistic as we head into the summer months and what is typically a period of better demand for chicken. Broiler egg sets have continued to be lower, which indicates continued lower supply levels. While our industry has never gone through the summer demand season with five to six per cent less chicken, we have also never gone through the summer months with the economy and the American consumers as uncertain and cautious as they are today," added Mr Sanderson.