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Deboning Plant Puts Cagle's on Road to Improvement

by 5m Editor
11 November 2010, at 9:19am

US - Cagle's, Inc. has announced its results for the second quarter. Highlights include significant increases in net sales and earnings per share.

Cagle's, Inc. has reported net income of $3.1 million or $0.67 per share, on net sales of $83.2 million for the second quarter ended 2 October 2010. For the comparable quarter a year ago, which was a 14-week period, the company reported net income of $0.7 million, or $0.15 per share, on net sales of $87.6 million.

Net sales for the second quarter were up 2.3 per cent or $.035 per pound, versus the 14-week prior year second quarter adjusted to reflect a 13-week period, as we experienced a 19 per cent increase in boneless breast and tenders production reflecting the successful transition of our Pine Mountain Valley plant to a deboning facility. Quoted market prices of products for the second quarter of fiscal 2011 versus the same period last year were mixed as boneless breast and tenders increased 23.9 per cent, wings decreased 13.0 per cent, drums decreased 21.0 per cent, leg quarters were 7.5 per cent lower, and whole birds without giblets were quoted 30.7 per cent higher.

Cost of sales for the second quarter of fiscal 2011 of $73.5 decreased 3.2 per cent as compared to the 14-week prior year second quarter adjusted to reflect a 13-week period. Operational efficiencies improved supported by larger bird size at our Pine Mountain facility with a second quarter production volume increase of 5.5 per cent and a year to date increase of 7.5 per cent both as compared to adjusted 13-week and 26-week periods of fiscal 2010. Feed ingredient prices for broilers processed in the second quarter of fiscal 2011, which represented 38 per cent of the total cost of sales, decreased 6.0 per cent as compared to the second quarter of fiscal 2010.

Cagle's says as it continues the ongoing transformation of its Pine Mountain Valley operation, it is focusing on yield improvements and cost control to maximise margins as well as providing higher utilisation of assets already in place. Over the next two years, it expects to more than double our Pine Mountain production compared to volumes reflected in fiscal 2010 results, providing operational efficiencies throughout all phases of the company. The Collinsville facility continues to expand its value added customer base in the fast-food and grocery deli business and is running at better than 100 per cent capacity.

With reduced availability of competing protein, Cagle's is cautiously optimistic for the remainder of this fiscal year. Recent increases of grain cost will stress margins for all protein producers but chicken remains an excellent cost effective choice for consumers.

For the first two quarters of fiscal 2011, the company reported net income of $6.6 million or $1.42 per share, on net sales of $161.7 million. For the comparable period of fiscal 2010, which was a 27-week period, the company reported net income of $2.0 million, or $0.43 per share, on net sales of $165.6 million.

Further Reading

- You can view the full report by clicking here.