Sanderson revenue up in 1Q, cuts loss by $25M
LAUREL, Miss. — For its first quarter ended Jan. 31, Sanderson Farms Inc. reported a net loss of $8.0 million, despite sales that topped the previous year’s by more than $90 million. Quarterly net sales were $517.8 million compared with $427.7 million for the same period a year ago. For the quarter, $8.0 million net loss, or $0.36 per share, compared with a net loss of $33.6 million, or $1.52 per share, for the first quarter of fiscal 2011.
“Our results for the first quarter of fiscal 2012 reflect improved, but still challenging, conditions for our industry,” said Joe Sanderson, Jr., chairman and chief executive officer of Sanderson Farms, Inc. He attributed the challenging conditions to continued weak demand for poultry in the foodservice segment while retail demand remained steady. Languishing foodservice demand, combined with surplus supplies are negatively impacting the company’s prices for boneless breast meat at its foodservice-focused plants, according to Sanderson.
“We believe foodservice demand will remain under pressure until the national employment environment improves,” he said. Feed costs also continue to hinder profitability, despite prices that have thankfully relented from record highs set late last year. Sanderson’s average feed cost per pound of poultry products sold increased 16.7 percent during the fiscal first quarter compared to the same period a year before, and prices paid for corn and soybean meal increased 11.6 percent and decreased 1.2 percent, respectively, compared with the fiscal first quarter of 2011.
Sanderson said average Georgia dock prices for whole chickens were 5.3 percent higher in the fiscal first quarter of 2012 than the previous year’s, while boneless breast meat prices during the quarter were approximately 7.9 percent higher than the prior-year period. The average market price for bulk leg quarters increased approximately 41.4 percent for the quarter compared with the same period last year. Jumbo wing prices, which averaged $1.43 per pound, were higher by 44 percent compared with last year’s first fiscal quarter.
“Market conditions steadily improved during our first fiscal quarter compared with last year’s first quarter and compared with our fourth quarter of fiscal 2011,” he said, pointing out that the company realized a profit during the month of January. However, “corn supplies are at their tightest level in 15 years, which will likely keep upward pressure on grain costs at least until the market gets some visibility into the quantity and quality of the 2012 crops.”
Forecasts indicating lower production numbers in 2012 come as welcome news moving into grilling season, when demand typically increases. However, Sanderson expects the sluggish demand in the foodservice segment will prevent any supply shortages.