The company announced a net loss of $2.2 million, or $0.46 per share, on net sales of $72.0 million for the third quarter ended Jan. 1. For the same quarter a year ago, it reported a net loss of $0.3 million, or $0.08 per share, on net sales of $70.4 million.
Net sales for the third quarter were up 2.2% vs. the prior year third quarter reflecting an 11.9% increase in lbs. sold and a reduction in sales price per lb. of 6.9 cents. Quoted market prices of products for the third quarter of fiscal 2011 versus the same period last year were mixed: boneless breast increased 4.8%; tenders decreased 4.5%; wings decreased 20.8%; drums decreased 22.8%; leg quarters increased 7.7%, and whole birds without giblets were quoted 26.2% higher.
Discounting from these quoted markets was prevalent especially toward the end of the quarter, as the industry increased production in excess of 4% as reported by USDA increased egg sets and chick placements.
Cost of sales for the third quarter of fiscal 2011 of $71.2 million increased 6.3% as compared to prior year third quarter, reflecting an increase of pounds processed of 10.6% largely influenced by the gain in the bird size processed at the company’s Pine Mountain Valley facility. Feed ingredient prices for broilers processed in the third quarter of fiscal 2011, which represented 39% of the total cost of sales, increased 18.6% as compared to the third quarter of fiscal 2010.
Feed ingredient prices continue to challenge the company and industry, as it experienced a 30% increase in the price of corn coupled with a 22% increase in the price of soybean meal since the start of its third quarter. The increases comes as US farmers have delivered their third-largest corn crop ever, of which 40% is now being used to generate ethanol as mandated and subsidized by our government.
US farmers produced the second-largest soybean crop in US history. As influenced by current fiscal policy, the US dollar is worth less and less on the world market, which is supportive of increasing exports of this critical feed ingredient resulting in the lowest stocks-to-use ratio of soybean since the mid-1960's, the company relayed.
Competing protein prices are heading to record highs as the consumer is beginning to feel the impact of higher feed costs, the company warned. In its third quarter, Cagle's began a 20% cut-back in production at its deboning operation in an effort to balance supply and demand.