Sanderson Farms reports return to profitability for year

by Bryan Salvage
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LAUREL, MISS. — A solid fourth-quarter performance coupled with improvements in the chicken market and decreases in primary feed ingredient costs helped to pave the way for Sanderson Farms Inc.’s successful fiscal 2009.

Net income for the company’s fiscal year 2009 ending Oct. 31 totaled $82.3 million, or $3.99 per share, compared with a net loss of $43.1 million, or $2.13 per share, for the previous year. Fiscal 2009 net sales were a record-breaking $1.789 billion compared with $1.724 billion for fiscal 2008.

The company earned net income of $19.8 million, or $0.96 per share, for its fourth quarter of fiscal 2009 compared to a net loss of $51.9 million, or $2.56 per share, for the fourth quarter of fiscal 2008. Fourth-quarter net sales were $469.0 million, up from $460.2 million for the same period a year ago.

"Fiscal 2009 was a successful year for Sanderson Farms with a solid performance in our fourth quarter," said Joe F. Sanderson, Jr., chairman and chief executive officer. "Sales for the year were a record $1.789 billion, up 3.8% over fiscal 2008, reflecting the growth in our Waco facility, offset by our production cuts earlier in the year. While the overall chicken market improved during our fourth-fiscal quarter compared with the same period a year ago, market conditions were less favorable than the third quarter of this fiscal year. However, we continued to benefit from lower grain prices, with improved profitability over the prior year."

Market prices for poultry products were mixed in the fourth quarter of fiscal 2009 compared with prices a year ago, Mr. Sanderson said. As measured by a simple average of the Georgia dock price for whole chickens, prices were lower by approximately 3.8% in the company's fourth-fiscal quarter compared with the same period in fiscal 2008, and were higher by 4.0% for the fiscal year compared with the prior year.

Boneless breast-meat prices during the quarter averaged 6.5% higher than the prior-year period, and averaged over 1.0% lower for fiscal 2009 compared with the prior year. Jumbo wing prices averaged $1.32 per lb. during the fiscal year, up 40.7% from the average of $0.94 per lb. for fiscal 2008. The average market price for bulk-leg quarters decreased approximately 29.2% for the quarter and 19.2% for fiscal 2009 when compared with the same periods last year. The drop in leg-quarter prices during the quarter reflects the impact of lower overall export demand, the company said.

Prices for corn and soybean meal, the company’s primary feed ingredients, decreased 35.2% and increased 4.2%, respectively, during the fourth quarter compared with the fourth quarter a year ago. For the year, total feed costs were 10% lower than fiscal 2008.

"We are pleased to have our new Kinston, N.C. poultry complex back on track and the construction of a new feed mill, poultry processing plant and hatchery is moving forward on schedule," Mr. Sanderson said. "We expect to place our first live pullets in North Carolina in April 2010, and look forward to beginning operations there in January 2011."

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