Sanderson Farms more than doubles net income in first quarter
Higher poultry market prices, lower feed costs help Sanderson Farms improve net income, net sales
Sanderson Farms achieved a net income of $66.5 million during the first quarter of fiscal year 2015, more than doubling its net income of $28.9 million reported for the first quarter of fiscal year 2014. The poultry company also reported a jump in net sales for the first quarter, with net sales reaching $667.4 million, up from $584.9 million in net sales for the same quarter of 2014.
The first quarter ended January 31.
"Our results for the first quarter marked a solid start to the fiscal year," said Joe F. Sanderson Jr., chairman and CEO of Sanderson Farms. "Poultry market prices were higher compared to the same period a year ago, and our grain costs were lower. Retail grocery store demand for chicken has remained strong, and it appears food service demand may be benefitting from lower priced gasoline."
According to Sanderson, overall market prices for poultry products were higher during the first quarter compared with the same period last year. Compared with the first fiscal quarter of 2014, the average Georgia dock price for whole chickens was approximately 9.2 percent higher, boneless breast meat prices were approximately 6.6 percent higher, the average market price for bulk leg quarters increased approximately 2.1 percent, and jumbo wing prices were higher by 52.2 percent. The company's average feed cost per pound of poultry products processed decreased 3.27 cents per pound, or 10.1 percent, compared with the first quarter of fiscal 2014, and prices paid for corn and soybean meal, the Company's primary feed ingredients, decreased 9.3 percent and 5.5 percent, respectively, compared with the first quarter of fiscal 2014.
"The record corn and soybean crops harvested in the United States last fall sufficiently restocked United States soybean and corn balance tables headed into the 2015 planting season, but market prices for both corn and soybean meal have moved higher since the harvest," added Sanderson. "Despite this increase in grain prices, had we priced all of our fiscal 2015 grain needs at yesterday's prices, our grain costs would be lower by $121.0 million during fiscal 2015 compared to fiscal 2014, which would translate into a savings of 3.6 cents per pound processed.
"Broiler egg sets have been higher than the previous year's levels every week since last summer, and the industry has also increased breeder stock supplies. Financially healthy, fully employed and confident American consumers could absorb the additional chicken production indicated by higher broiler egg sets if we see continued improvement in macroeconomic conditions and relatively low gasoline prices.
Operations begin at new complex in Texas
Sanderson reported that construction has been completed at its new big bird deboning complex in Palestine, Texas, and operations at the complex began on February 9.
“We look forward to the opportunities the new facility will create as we move to full production over the next year,” said Sanderson.
Future complex in North Carolina
Sanderson Farms continues its due diligence on sites in North Carolina for its next poultry complex, Sanderson said. The company hopes to complete that process soon. Construction of the new complex will be subject to various contingencies, including final approval by the company's board of directors.