Sanderson Farms concluded its 2017 fiscal year with a meaningful increase in both net income and net sales, despite a drop in net income for the fourth quarter.
The fiscal year for the third largest broiler company in the United States ended on October 31, and the company released its financial results on December 14.
Fiscal year 2017 results
Net income for the fiscal year totaled $279.7 million, or $12.30 per share, compared with net income of $189.0 million, or $8.37 per share, for last fiscal year. Net sales for fiscal 2017 were $3.342 billion when compared with net sales of $2.816 billion for fiscal 2016.
Fourth quarter results
For the quarter, the company reported net income of $72.9 million, or $3.20 per share, compared with net income of $76.0 million, or $3.36 per share, for the fourth quarter of fiscal 2016.
Net sales for the fourth quarter of fiscal year 2017 were $919.9 million, compared with $790.8 million for the same period a year ago.
"The fourth quarter marked the end of another record year for Sanderson Farms," said Joe F. Sanderson, Jr., chairman and chief executive officer of Sanderson Farms. "Market conditions weakened during our fourth fiscal quarter of 2017, as market prices declined seasonally after Labor Day. The seasonal decrease in demand was exacerbated by hurricane disruptions and higher than expected chicken production caused by higher than expected live weights. Despite this weakness, we performed well during the quarter.
"For the fiscal year, we reported record annual sales, with improved overall poultry market prices compared with fiscal 2016, and higher volume of poultry products sold by 13.2 percent. Grain prices were slightly higher during fiscal 2017 compared with prices paid in fiscal 2016; however, feed costs in processed flocks were lower per pound on improved live bird performance. For fiscal 2017, we sold 4.22 billion pounds of dressed poultry, another record, compared with 3.73 billion pounds in fiscal 2016."
According to Sanderson, overall market prices for poultry products were generally higher in fiscal 2017 compared with prices a year ago, but were mixed for the fourth fiscal quarter of 2017. Boneless breast meat prices averaged 6.3 percent lower in the fourth quarter than the prior-year period. For the full fiscal year, however, boneless breast meat prices were 5.8 percent higher compared with fiscal 2016. Jumbo wing prices averaged $2.09 per pound during the fourth quarter of fiscal 2017, up 28.4 percent from the average of $1.62 per pound during the prior-year period. Jumbo wing prices averaged $1.92 per pound during the fiscal year, up 21.4 percent from the average of $1.58 per pound for fiscal 2016. The average market price for bulk leg quarters increased approximately 22.7 percent for the fourth fiscal quarter of 2017 compared with the fourth fiscal quarter of 2016, and increased 21.2 percent for fiscal 2017 compared to fiscal 2016. Improved dark meat prices during the fiscal year reflect the increase in industry export volumes during calendar 2017. Cash prices for corn during the fourth fiscal quarter increased by 6.0 percent, while soybean meal cash prices were down 2.0 percent.
Profitability helps finance expansion projects
"We are pleased that our profitability during fiscal 2017 allowed us to fund from cash on hand the completion of our new facilities in St. Pauls, North Carolina, start construction at our new complex in Tyler, Texas, strengthen our balance sheet, and reward our shareholders with a special dividend," Sanderson said. "We are well positioned to continue our growth strategy as we move St. Pauls to full production during fiscal 2018 and continue construction of our new complex in Tyler.”
"As of October 31, 2017, our balance sheet reflected $1.733 billion in assets, stockholders' equity of $1.433 billion and net working capital of $650.8 million. We had no debt at fiscal year-end. We believe our balance sheet provides us with the financial strength not only to support our growth strategy, but also to consistently manage our operations through the 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.