Cal-Maine Foods started the 2019 fiscal year with a return to profitability and a 29.6 increase in net sales.
Reporting the results for the first quarter, which ended on September 1, the world’s largest egg company reported a net income of $12.4 million, compared to a loss of $16 million for the first quarter of the 2018 fiscal year.
Its net sales were $340.6 million, a 29.6 percent year-over-year increase.
“We were pleased to begin fiscal 2019 with a solid financial and operating performance, as we experienced more favorable market conditions than a year ago. Our sales for the first quarter were up 29.6 percent, reflecting higher average customer selling prices for shell eggs and consistent sales volumes compared with the same period a year ago,” Dolph Baker, chairman and chief executive officer of Cal-Maine Foods, stated in a press release.
“While we experienced some volatility in market prices during the quarter, our average customer selling price for shell eggs was up 28.5 percent compared with the first quarter of fiscal 2018. According to recent reports from IRI, a consumer market research firm, demand trends have been favorable for retail customers. Food service demand remained steady and year-to-date shell egg exports were slightly higher than the same period last year. Together, these trends have supported market prices with a manageable level of egg supply. Although overall egg production growth has been modest, according to recent USDA reports, the number of chicks hatched has increased 11 percent since the beginning of calendar 2018, indicating future increases in laying hen numbers. Given these trends, the potential increase in the shell egg supply could create additional pricing pressure.”
Specialty egg sales
Baker reported that specialty eggs sales, excluding co-pack sales, were up 9.7 percent over the same period last year, as consumer demand for specialty eggs has continued to support this segment of the egg market.
“Specialty egg prices were steady for the first quarter of fiscal 2019, with the average customer selling price at approximately the same level as a year ago. Specialty egg revenue was 34.2 percent of our total shell egg revenue, compared with 39.6 percent for the first quarter of fiscal 2018, due to higher market prices for non-specialty eggs in the current period. We remain focused on providing our customers with a favorable product mix of healthy and affordable options including conventional, cage-free, nutritionally enhanced and organic eggs,” said Baker.
Cage-free conversion update
With the expected increase in demand for cage-free eggs, Cal-Maine Foods is prepared to meet the needs of national retail grocery stores and restaurant chains who have pledged to move away from conventional eggs, Baker said.
The company currently has additional capital projects underway to convert its facilities to convertible/cage-free capacity and replace less efficient production.
“These projects are designed to offer the flexibility to produce conventional eggs or cage-free eggs, allowing us to more effectively manage our future product mix,” Baker stated.