Sanderson Farms net income increases in Q3 2016
Company’s net sales, however, drop for the quarter
Sanderson Farms reported a net income of $54.7 million during third quarter, jumping from the net income of $50.9 million achieved during the third quarter of fiscal 2015.
The third largest poultry company in the United States achieved a gain in net income, despite a drop in net sales for the quarter. Net sales for the third quarter of were $728.0 million compared with $739.9 million for the same period a year ago.
"Sanderson Farms' financial results for the third quarter of fiscal 2016 reflect a continued favorable balance of the supply and demand for fresh chicken sold to retail grocery store customers," Joe F. Sanderson, Jr., chairman and CEO of Sanderson Farms, said in a press release. "That balance was reflected in a Georgia Dock whole bird price that, while lower on average than during last year's third fiscal quarter, remained strong during the current third fiscal quarter. Market prices for products from our plants that process a larger bird were mixed during the quarter when compared with last year's third fiscal quarter. Bulk leg quarter prices came under pressure during last year's third fiscal quarter as a result of weak export demand due to bans on United States poultry products related to the discovery of avian influenza in the United States, a relatively strong United States dollar and lower oil revenue in countries with oil-based economies.
“Market prices for bulk leg quarters were higher this year as all avian influenza-related import bans have been lifted except for China's, but prices remain below historical averages as the other headwinds remain. Food service traffic and demand in the United States remain stubbornly static, and flat demand combined with additional industry production and higher domestic poultry supplies as a result of lower exports kept a lid on market prices for boneless breast meat during our third fiscal quarter. However, market prices for boneless breast meat have moved significantly higher during August."
According to Sanderson, compared with the third fiscal quarter of 2015, the average Georgia Dock price for whole chickens was approximately 3.6 percent lower, boneless breast meat prices were lower by approximately 12.7 percent, the average market price for bulk leg quarters increased approximately 29.6 percent, and jumbo wing prices were lower by 3.6 percent. The company's average feed cost per pound of poultry products processed decreased 1.76 cents per pound, or 6.5 percent, compared with the third quarter of fiscal 2015, and prices paid for corn and soybean meal, the company's primary feed ingredients, increased 2.5 percent and decreased 6.9 percent, respectively, compared with the third quarter of fiscal 2015.