August 12, 2010

Cagle's reports marginal decrease in Q1 sales volume

US poultry meat processor, Cagle's Inc. has announced its results for the first quarter ended July 3, 2010, which includes a marginal increase in sales, the result of a 3% decrease in volume but an increase in unit price.

However, cost of sales was down 5%. Cagle's, Inc. has reported net income of US$3.5 million or US$0.75 per share for the first quarter of fiscal year 2011 compared to net income of US$1.3 million or US$0.28 per share for the first quarter of fiscal year 2010.

Revenues for the first quarter were US$78.6 million up 0.7%, reflecting a decrease in pounds sold of 3.1% and an increase in sales price for poultry of US$0.013 per pound as compared to the same period of fiscal 2010.

Quoted market prices for products for the first quarter of fiscal 2011 versus the same period last year were mostly down with the exception of boneless breast which increased 9.1%, and breast tenders which increased 7.7%. Wing markets decreased 11%, drums decreased 17%, leg quarters were 19% lower, and whole birds without giblets were quoted 7.3% higher.

Cost of sales for the first quarter of fiscal 2011 decreased 4.9% as compared with the same period last year, from US$71.7 million to US$68.2 million. Feed ingredient prices for broilers processed in the first quarter of fiscal 2011, which represented 36% of the total cost of sales, decreased 8.5% as compared to the first quarter of fiscal 2010.

This quarter marked the completion of the company's transition of its Pine Mountain Valley plant to a deboning facility which has provided Cagle's with the opportunity to market products in the boneless institutional and further processing areas. This transition involved expenditures of approximately US$5 million for fixed asset and working capital to support the new product lines and has increased pounds processed at Pine Mountain in excess of 20%.

Meanwhile, the company said its shifting product mix and positive margins on existing products have provided a good return for the company and stakeholders for the first quarter of fiscal 2011.

It expects protein markets to continue to be strong for the remainder of this summer supported by low cattle and hog inventories and limited expansion of poultry supplies.