Higher prices for dark meat products results. 
LAUREL, Miss. – Sanderson Farms Inc. kicked off fiscal 2018 on a positive note with gains in net sales and net income. 

For the first quarter ended Jan. 31, 2018, the company reported net income of $51.2 million, or $2.24 per share, compared with net income of $24.0 million, or $1.06 per share, reported in the year-ago period.

Net sales the first quarter were $771.9 million, compared with $688.3 million for the same period last year.

“Our results for the first quarter reflect higher market prices for dark meat products sold from our big bird deboning plants compared with last year’s first quarter, offset by lower white meat prices,” Joe F. Sanderson, Jr., chairman and CEO of Sanderson Farms, said in a statement. “Poultry market prices for tray pack products sold to retail grocery store customers were higher when compared with the same period a year ago and continued to reflect a healthy supply and demand balance in that customer market.”

Sanderson noted overall weakness in the foodservice market driven by lower traffic numbers through legacy foodservice chains. Lower prices for boneless breast meat reflected the weakness, Sanderson said. “Demand and prices for jumbo wings weakened counter seasonally during the quarter,” he added, “and market prices were lower by nine percent when compared to last year’s first quarter.”

Sanderson said average prices of the company’s retail tray pack products were approximately 2.1 percent higher, boneless breast meat prices were approximately 2.8 percent lower, bulk leg quarters increased by approximately 15.9 percent and jumbo wing prices were lower by 9 percent.

In other company news, an investor proposal for Sanderson Farms to transition to antibiotic-free poultry production received 43.1 percent of shareholders’ votes during the company’s annual meeting held Feb. 20, according to As You Sow, a non-profit organization that promotes corporate social responsibility through shareholder advocacy. As You Sow filed the proposal in January, and the Sanderson Farms board recommended a “no” vote.

“Sanderson Farms cannot ignore this many shareholders. The support for change is overwhelming,” Austin Wilson, Environmental Health Manager at As You Sow, said in a statement. “Sanderson Farms is the only major poultry producer that has not committed to reducing reckless antibiotic use — but we don’t see that lasting very long.”

The company has but has a plan to transition to antibiotic-free production if investors vote in favor of adopting it, but so far has resisted the change.

In a filing with the Securities and Exchange Commission, Sanderson Farms said an oversupply of ABF poultry was among the reasons the board advised against adopting the proposal. The company said consumers of antibiotic-free chicken primarily seek boneless breast meat and chicken tenders, while wings and dark meat of ABF chickens are sold into conventional markets.

The company also argued that price, quality and service drive purchasing decisions of Sanderson’s customers and consumers. ABF products are more expensive to produce, the company said, and appeal primarily to shoppers at high-end specialty stores.

 “We do not market our product to these kinds of stores or to restaurants that have adopted ABF menu items,” the company said in the filing. “Further, we believe the market for ABF products is currently oversupplied, and supply and demand dynamics have worsened.”

Sanderson Farms’ competitors already have transitioned to antibiotic-free poultry production or have pledged to make the switch over time. Perdue moved its “No Antibiotics Ever” line of poultry products into mainstream grocery areas and foodservice menu items starting in 2016. Tyson Foods and Pilgrim’s Pride also have transitioned to ABF poultry production.