February 29, 2012
Sanderson Farms'' 1Q loss reduces, revenues up
As Sanderson Farms Inc.''s revenue grew more than expected, its first-quarter loss narrowed, despite feed costs continued to rise.
Sanderson has now posted losses for five consecutive quarters. While retail demand for chicken has remained steady, the company said food service demand will remain under pressure until the national employment environment improves.
"Our results for the first quarter of fiscal 2012 reflect improved, but still challenging, conditions for our industry," said Chairman and Chief Executive Joe F. Sanderson Jr.
Sanderson said market conditions steadily improved during the first quarter, compared with a year earlier, and the company was profitable in January.
The industry has been challenged by rising feed costs, a chicken glut and weak prices despite a buoyant export market. Rival Pilgrim''s Pride Corp. (PPC) earlier this month disclosed its fourth straight quarterly loss tied to soaring feed costs and weak prices for chicken meat.
Sanderson noted grain prices have retreated from the highs they set last fall, though higher feed costs continues to affect profits. Corn supplies are at their tightest level in 15 years and prices will remain elevated until the market gets some visibility into the quantity and quality of this year''s crops, he said.
In the latest quarter, boneless chicken-breast prices rose 7.9% from a year earlier, while the average price for bulk leg quarters increased 41%. The company''s prices for corn were up 12% while soy meal decreased 1.2%. Corn and soy meal are the company''s primary feed ingredients.
For the quarter ended January 31, Sanderson reported a loss of US$8 million, or US$0.36 a share, compared with a year-earlier loss of US$33.6 million, or US$1.52 a share. Excluding inventory charges, the year-ago loss was US$0.87. Revenue increased 20% to US$517.8 million.
Analysts polled by Thomson Reuters most recently predicted a profit of US$0.18 a share on revenue of US$509 million.
Shares closed at US$49.47 Monday and were inactive premarket. The stock hit its lowest point in two years in September, but has gained 30% since then.