Sanderson Farms Inc. posted a net loss of $16.3 million for the second quarter of 2011 compared to a net income of $35.1 million for the same time in 2010.
The company's results include a charge of $6 million, before income taxes, to reduce the value of live inventory from cost to market; excluding this adjustment, the net loss for the second quarter was $12.3 million. According to Sanderson, market prices for poultry products for the second quarter were mixed, but lower overall, compared to the same quarter in 2010. Whole chicken prices increased 2% and bulk leg quarter market prices rose 17.7%, but boneless breast meat prices dropped 10.6% and jumbo wing prices were down 45.5% for the second quarter of 2011.
"The results for our second quarter of fiscal 2011 reflect current market conditions and the overall economic environment," said Joe F. Sanderson, Jr., chairman and CEO. "Our net sales were down 1.6% compared to the second quarter of fiscal 2010, reflecting overall lower average sales prices of chicken. Retail grocery store demand for chicken has remained strong. Export demand improved during the second quarter compared to the same period last year when U.S. poultry meat was banned from Russia. Demand from our food service customers has remained weak, and we expect this trend will continue with rising gas prices and high unemployment keeping consumers from dining away from home."
According to Sanderson, profitability was also affected by rising feed costs. "Feed costs in flocks sold increased 41.3% compared to last year's second fiscal quarter, and we expect grain prices to remain high and volatile for at least the rest of this year, as there is no margin for error with the 2011 grain crop."