Food service results push Sanderson Farms to loss
February 26, 2009
by Keith Nunes
LAUREL, MISS. — The decline in consumers dining out swung Sanderson Farms, Inc.’s first quarter 2009 financial results to a loss. During the quarter ended Jan. 31, the company experienced a loss of $6,749,000. The results compared unfavorably to a net income of $6,222,000, equal to 31c per share on the common stock, the company earned during the same period during 2008.
Sales for the first quarter were $388,884,000, which compared with sales of $362,566,000 during the first quarter of 2008.
"The results for the first quarter of fiscal 2009 reflect prevailing economic conditions and reduced consumer demand for protein consumed away from home," said Joe F. Sanderson Jr., chairman and chief executive officer. "Demand for chicken products held steady in the retail grocery market, but the slowdown in restaurant traffic continues to adversely affect sales to our food service customers.
"While market prices improved during the quarter compared to where the markets stood at the end of fiscal 2008, it was not enough to offset our costs. Grain prices for the quarter were actually down sequentially compared to our fourth quarter of fiscal 2008, but were still higher than last year’s first quarter."
The company said the costs it incurred for corn and soybean meal increased 4.5% and 9.2%, respectively, compared with the first quarter of fiscal 2008.
As a result of the market slow down, Sanderson Farms had cut back chicken production. Mr. Sanderson said the company does not plan to return to full production until "we see improvement in market conditions."
"We continue to believe market forces will balance supply and demand for our industry over the long term," he said. "Until consumer demand returns, any market price improvement will have to come from supply side reductions."