Sanderson Farms swings to loss in Q2
May 26, 2016
by Erica Shaffer
Sanderson Farms had a bounce back second quarter.
LAUREL, Miss. – Weak prices for poultry continued to weigh on Sanderson Farms Inc. in the second quarter, but lower prices for feed and higher volumes helped the poultry processor improve earnings compared to the previous quarter.
Net income for the second quarter ended April 30 was $47.6 million, or $2.11 per share, compared with net income of $71.2 million, or $3.13 per share, for the second quarter of fiscal 2015.
Net sales for period were $692.1 million compared with $716.6 million for the same quarter a year ago.
Joe F. Sanderson, Jr., chairman and CEO, said the average Georgia dock price for whole chickens was approximately 2.4 percent lower; boneless breast meat prices were approximately 21.4 percent lower; the average market price for bulk leg quarters declined 16 percent and jumbo wing prices were higher by 12 percent.
The average feed cost per pound of poultry products processed eased 3.8 cents per pound, or 13 percent, compared with the second quarter of fiscal 2015. Meanwhile, Sanderson said, prices paid for corn and soybean meal decreased 1.9 percent and 21 percent, respectively, compared with the second quarter of fiscal 2015.
“The results for our second quarter of fiscal 2016 reflect lower grain costs, continued favorable demand for poultry products from retail grocery store customers, higher volume, and an improving export environment,” Sanderson said in a statement. “While our sales price per pound decreased significantly during the first half of this fiscal year compared with last year, market prices improved steadily through the second fiscal quarter as poultry export market fundamentals improved.
“Our net sales for the quarter reflect lower sales prices, offset by significantly more pounds sold. Our new Palestine, Texas, facility is running well as we continue to move toward full production, and we expect to reach that milestone in our fourth fiscal quarter. Poultry pounds sold increased 8.6 percent during the quarter compared with last year’s second quarter. We also continue construction at the new hatchery, processing plant and waste water treatment facility in St. Pauls, North Carolina, and we expect to open the plant during our first fiscal quarter of 2017.”
Net income for the first six months totaled $58.3 million, or $2.58 per share, compared with net income of $137.7 million, or $6.00 per share, for the first six months of 2015. Net sales for the first six months of fiscal 2016 were $1.30 billion compared with $1.38 billion for the same period of fiscal 2015.
Sanderson said that while breeder placements in 2016 have outpaced 2015 placements, most of the breeders placed are producing hatching eggs for export.
“Broiler egg sets in domestic hatcheries over the past few weeks continue to run below last year’s numbers, while broiler live weights were up approximately 1.5 percent through March,” Sanderson said. “The current USDA forecast for broiler production during calendar 2016 to increase approximately 2.8 percent over calendar 2015 seems reasonable, but may prove to be high should egg sets continue to trail last year’s numbers. Chicken will compete for grilling space this summer against more beef and slightly more pork than during last year, so how well supply and demand for chicken will be balanced will depend in large part on continued improvement in export demand and the appetite of domestic consumers for more protein.”