Sanderson Farms reported a highly profitable fourth quarter of the company’s 2016 fiscal year, with net income nearly tripling.
For the quarter ending October 31, Sanderson Farms company reported net income of $76.0 million, or $3.36 per share, compared with net income of $27.4 million, or $1.22 per share, for the fourth quarter of fiscal 2015. Net sales for the fourth quarter of fiscal 2016 were $790.8 million compared with $679.6 million for the same period a year ago.
Net sales for fiscal 2016 were $2.816 billion compared with $2.803 billion for fiscal 2015. Net income for the year totaled $189.0 million, or $8.37 per share, compared with net income of $216.0 million, or $9.52 per share, for last year.
"The fourth quarter marked the end of another successful year for Sanderson Farms," said Joe F. Sanderson, Jr., chairman and chief executive officer of Sanderson Farms. "Market conditions strengthened at the beginning of our fourth fiscal quarter of 2016, although market prices declined seasonally after Labor Day. We reported record annual sales despite a decline in overall poultry market prices compared with fiscal 2015, which decline was especially pronounced during the first half of the year. Grain prices were lower during the year when compared with fiscal 2015. For the year, we sold 3.731 billion pounds of dressed poultry, another record, compared with 3.418 billion pounds in fiscal 2015."
Market prices and their impact
According to Sanderson, despite lower prices for the full fiscal year, overall market prices for poultry products were higher in the fourth quarter of fiscal 2016 compared with prices a year ago, primarily as a result of improved export demand. As measured by an average of the Georgia Dock price for whole chickens, prices were lower by approximately 4.0 percent in the company's fourth fiscal quarter compared with the same period in fiscal 2015, and were lower by 2.7 percent for the fiscal year compared with the prior year.
The Georgia Dock whole bird price remained relatively strong during fiscal 2016, consistent with continued strong demand for retail grocery chill pack products and flat production, Sanderson noted.
Boneless breast meat prices averaged 7.4 percent higher in the fourth quarter than the prior-year period. For the full fiscal year, however, boneless prices were 12.5 percent lower when compared with fiscal 2015, reflecting continued weakness in food service demand. Unlike demand for chicken at retail grocery stores, food service demand remains relatively weak and somewhat volatile. Jumbo wing prices averaged $1.62 per pound during the fourth quarter of fiscal 2016, up 9.5 percent from the average of $1.48 per pound during the prior-year period. Jumbo wing prices averaged $1.58 per pound during the fiscal year, up 3.9 percent from the average of $1.52 per pound for fiscal 2015. The average market price for bulk leg quarters increased approximately 46 percent for the quarter, but decreased approximately 6.2 percent for fiscal 2016.
Improved dark meat prices during the company's fourth fiscal quarter reflect the increase in industry export volumes during the second half of fiscal 2016, as most avian influenza related bans on United States poultry meat were lifted. Cash prices for corn during the fourth fiscal quarter decreased by 4.6 percent, while soybean meal cash prices were down 10.6 percent.
Sanderson Farms remains debt-free
As of October 31, Sanderson Farms’ balance sheet reflected $1.423 billion in assets, stockholders' equity of $1.190 billion and net working capital of $465.1 million.
The company had no debt at year-end, Sanderson said.
“Our balance sheet provides us with the financial strength not only to support our growth strategy, but also to consistently manage our operations through cycles that characterize our industry. We deeply appreciate the hard work and dedication to excellence of our employees, growers and everyone associated with our company," Sanderson concluded.