Sanderson Farms net income jumps in second quarter
Lower feed costs have helped Sanderson Farms improve financial picture
Sanderson Farms reported a net income of $71.2 million for the second quarter of fiscal year 2015, up significantly from the net income of $51 million from the second quarter of 2014. The poultry company also reported net income of $137.7 million for the first half of FY 2015, eclipsing its net income of $79.9 million from the first half of FY 2014.
Both the second quarter and the first half ended on April 30.
Net sales for the second quarter of fiscal 2015 were $716.6 million compared with $660.7 million for the same period a year ago. Net sales for the first six months of fiscal 2015 were $1,384.0 million compared with $1,245.6 million for the same period of fiscal 2014.
"The results for our second quarter of fiscal 2015 reflect lower grain costs and continued favorable demand for poultry products," said Joe F. Sanderson, Jr., chairman and CEO of Sanderson Farms. "Our net sales were 8.5 percent higher compared with the second quarter of fiscal 2014, reflecting increased volume offset by slightly lower market prices. Demand for chicken remains strong from our retail grocery store customers and, for the first time since 2008, we are able to say demand at food service has improved. Traffic and same store sales at food service establishments has improved across most all segments of the industry, aided by lower gasoline prices and improving macroeconomic factors.
"Our profitability for the second quarter also benefited from lower feed costs," added Sanderson. "Feed costs in flocks processed decreased 11.8 percent compared with last year's second fiscal quarter. Planting progress for 2015 grain crops is ahead of long term averages, and optimism for a second consecutive year of favorable production is supporting lower grain costs."
According to Sanderson, market prices for poultry products were mixed during the second quarter compared with the same period last year. Compared with the second fiscal quarter of 2014, the average Georgia dock price for whole chickens was approximately 8.1 percent higher, boneless breast meat prices were approximately 4.4 percent lower, the average market price for bulk leg quarters decreased approximately 20.3 percent, and jumbo wing prices were higher by 40.3 percent. The company's average feed cost per pound of poultry products processed decreased 3.9 cents per pound, or 11.8 percent, compared with the second quarter of fiscal 2014, and prices paid for corn and soybean meal, the company's primary feed ingredients, decreased 10.5 percent and 21.1 percent, respectively, compared with the second quarter of fiscal 2014.
Sanderson expansion projects going well
"We continue our start-up in Palestine, Texas, and it is going well," added Sanderson. "We also continue the permitting process at the hatchery, processing plant and waste water treatment facility in St. Pauls, North Carolina, and expect to begin construction in June,” said Sanderson.
Positive outlook for coming months
"Looking ahead, we are optimistic as we head into the summer months and what is typically the peak demand period for chicken,” said Sanderson. “Total grain costs remain below last year's prices, and demand for chicken products remains strong. Weekly broiler egg sets continue to run above last year's numbers, and breeder placements are higher. However, macroeconomic conditions continue to improve, and the market has absorbed the increased production well during the first half of our fiscal year. Market prices for boneless breast meat sold to our food service customers improved through April, and market prices for retail grocery store products remain at record levels. Regardless of market conditions, however, we will maintain our focus on maximizing our operating performance and sales execution," Sanderson concluded.