Sanderson Farms posts record net loss, sales advance
LAUREL, Miss. – Weaker poultry markets combined with higher grain costs played a major role in Sanderson Farms Inc.’s FY2011 record net loss of $127.1 million, or $5.74 per share, compared with net income of $134.8 million, or $6.07 per share, for the year-earlier. For the fourth quarter, the company suffered a net loss of $21.6 million, or $0.97 per share, versus net income of $47.8 million, or $2.08 per share, for the fourth quarter of fiscal 2010.
FY2011 net sales totaled $1.978 billion compared with $1.925 billion for fiscal 2010. Net sales for the fourth quarter were $559.8 million compared with $529.1 million for the same period a year ago.
"The fourth quarter of fiscal 2011 marked the end of a challenging year for Sanderson Farms and the poultry industry,” said Joe Sanderson Jr., chairman and chief executive officer.
In the fourth quarter of fiscal 2011 compared with prices a year ago, overall market prices for poultry products were lower. However, as measured by a simple average of the Georgia dock price for whole chickens – prices were higher by approximately 1.5 percent in the company's fourth fiscal quarter compared with the same period in fiscal 2010, and were higher by 1.7 percent for the fiscal year compared with the prior year. The higher Georgia Dock whole bird price reflects steady demand for the company’s retail chill pack product in FY2011, he said.
Food service demand remains weak. As a result, boneless breast meat prices averaged 19.1 percent lower in the fourth quarter than the prior-year period. Boneless prices for fiscal 2011 were 14.5 percent lower compared with fiscal 2010 prices.
During the fiscal year, jumbo wing prices averaged $0.87 per lb., down 31.6 percent from the average of $1.27 per lb. for fiscal 2010. The average market price for bulk-leg quarters increased approximately 29.8 percent for the quarter and was up 19.2 percent for fiscal 2011. The somewhat strong dark-meat prices reflects good export demand during the year.
Prices for primary feed ingredients corn and soybean meal increased significantly during the year and were up 73.0 percent and 23.5 percent, respectively, during the fourth fiscal quarter compared with the same quarter one year earlier. Total feed costs in flocks sold for the year were 38.8 percent higher than fiscal 2010.
One significant milestone for Sanderson Farms in fiscal 2011 was the start-up of its new Kinston, NC, poultry complex, Sanderson said. This project was completed on time and on budget, and chicken processing began in January. Increased production at the Kinston plant during fiscal 2012 will more than offset the 4 percent production cut the company announced in August at its other plants, Sanderson said. The company currently plans to maintain its production cut through fiscal 2012.