Revenues for the quarter declined to $584.9 million compared to $595.8 million a year ago. The company's results were helped by lower feed costs, which helped offset mixed prices for poultry.
"Our results for the first quarter of fiscal 2014 marked a solid start to the fiscal year,” said Joe F. Sanderson, Jr., chairman and CEO. “While poultry market prices were mixed compared to the same period a year ago, our grain costs were lower. Retail grocery store demand for chicken has remained steady. However, we continue to see weak food service demand, which remains under pressure as a result of macroeconomic conditions and was also affected by weather during our first fiscal quarter. Weather also affected our first quarter results as we were forced to close several of our plants during the last week of January due to ice and snow. While we expect lower grain prices for the fiscal year and we experienced lower feed costs during the first quarter, grain prices have moved higher during February as a result of USDA’s lower than expected corn carryout estimate reported earlier this month.”
Prices for poultry were mixed during the first quarter, Sanderson noted. Georgia dock prices for whole chickens was 6.5 percent higher compared to a year ago, while boneless breast meat prices during the quarter were 4.3 percent lower. Bulk leg quarters were 15.6 percent lower, and jumbo wing prices were lower by 40.7 percent — down from the record high $1.92 per lb. the week before the Super Bowl — compared to the year ago quarter.
“We expect market conditions in the retail grocery store market to remain strong as chicken will compete once again during 2014 with high priced beef and pork,” Sanderson said. “While we benefited during the summer of 2013 from menu shifts toward chicken items, and away from relatively high priced beef at food service establishments, whether or not we get a similar benefit during 2014 is yet to be seen.”
Sanderson added that despite higher prices for both corn and soybean meal, Sanderson Farm's grain costs would be lower by $153 million during fiscal 2014 compared to fiscal 2013.
Commenting on domestic chicken production, Sanderson said "“While broiler egg sets have been higher than the previous year’s levels most every week since last August, the industry remains constrained by limited breeder stock supplies. As a result, we don’t expect a significant increase in domestic chicken production until the second half of calendar 2014 at the earliest. Healthy, fully employed and confident American consumers could easily absorb the additional chicken production indicated by higher broiler egg sets if we see further improvement in macroeconomic conditions.”