March 1, 2007

Sanderson Farms posts higher net sales for fiscal Q1 2007
 

Press release
 

Sanderson Farms, Inc. has reported net sales for the first fiscal quarter ending Jan 31, 2007 of US$292.7 million, up from US$236.2 million during the same period last year.

Net loss amounted to US$2.8 million compared with US$8.6 million during the same period in 2006.

"The results for the first quarter of fiscal 2007 showed improvement over the same period last year, although we still faced a challenging poultry market, particularly in the first half of the period," said Joe Sanderson, Jr., chairman and chief executive officer of Sanderson Farms, Inc.

Sanderson added that market prices were weak at the start of the quarter, but began to improve in December and have continued to register gains through February. However, he noted that higher and more volatile prices for corn and soymeal, the company's primary feed ingredients, and significantly higher costs, affected profitability during the quarter. Corn and soymeal costs for the quarter increased 57.4 percent and 0.1 percent respectively from fiscal Q1 2006.

Bulk leg quarter prices were higher by 21.4 percent during the quarter compared with last year's first fiscal quarter, reflecting year-on-year improvement in the export markets. While bird flu concerns dampened export demand in fiscal Q1 2006, this has not been the case so far this year.

Boneless breast meat prices rose about 12.9 percent from the same period last year, while wing prices averaged US$1.07/pound, up from US$0.87/pound in fiscal Q1 2006.

"We are pleased with our operating performance for the quarter as we resumed full production in January following production cuts implemented for the second half of calendar 2006. Our volumes during the quarter were up significantly when compared with last year's first fiscal quarter as a result of the additional production from Moultrie, Georgia, the conversion of our Collins plant in Mississippi to big bird deboning, and the absence this year of the effects of Hurricane Katrina. The construction of our Waco facility in Texas is ahead of schedule and we expect to begin processing in the fourth fiscal quarter of 2007," said Sanderson.

Sanderson expects a continued increase in the company's feed costs as corn demand from ethanol producers is affecting corn and soybean market prices. However, he remains confident that the chicken and grain markets will "strike a favourable balance over time."