February 25, 2004
US Chicken Producer Sanderson Farms Reports Sharp Rise in Profits
US-based chicken producer Sanderson Farms yesterday report strong financial and operating first quarter performance results of fiscal 2004 ended January 31, 2004.
Net sales for the first quarter of fiscal 2004 were $226.4 million compared with $184.2 million for the same period a year ago. For the quarter, the Company reported net income of $19.0 million, or $1.44 per diluted share, compared with $5.3 million, or $0.40 per diluted share, for the first quarter of fiscal 2003.
The Company recognized $177,000, net of income taxes, or $0.01 per diluted share, during the quarter for Sanderson Farms'share in the partial settlement of litigation against a vitamin supplier for overcharges. In the prior-year quarter, the Company recognized $3.8 million, net of income taxes, or $0.29 per diluted share, from similar litigation.
'Sanderson Farms' financial and operating performance during the first quarter marked a very strong start for fiscal 2004,'said Joe F. Sanderson, Jr., president and chief executive officer of Sanderson Farms, Inc. 'Our sales performance for the quarter reflects a marketplace that has seen high demand for chicken during what is typically a seasonally slow period. Both domestic and export demand for chicken products was strong during our first fiscal quarter, resulting in higher chicken prices. In addition, our operations continue to perform very well.'
According to Sanderson, market prices for all poultry products were appreciably higher during the first quarter than in the prior-year period. As measured by a simple average of the Georgia dock price for whole chickens, values increased approximately 11.3% in the Company's first fiscal quarter compared with the same period in 2003.
Boneless breast meat prices during the quarter were approximately 17.9% higher than the prior-year period and bulk leg quarter prices increased approximately 67.7% during the quarter. Wing prices averaged 99.7 cents per pound, up 89.9% from the average of 52.5 cents per pound during the first quarter of fiscal 2003. Market prices for corn and soybean meal, the Company's primary feed ingredients, were higher during the quarter. Market prices for corn increased 4.7%, while market prices for soybean meal increased 43.0%, compared with the first quarter a year ago.
The Company anticipates that overall feed grain prices will be higher during fiscal 2004 than during fiscal 2003. However, for the first quarter, this increase was more than offset by higher chicken prices.
Sanderson added, 'Looking ahead, we are optimistic about our prospects for fiscal 2004. Considering the current market environment, consumer demand trends and the projected moderate growth in production, we expect favorable market conditions to continue for the foreseeable future. Furthermore, we believe Sanderson Farms'100% natural fresh chicken and innovative product offerings, combined with excellent marketing and efficient operations, will continue to be the key drivers of our success in the marketplace.'
The Company also noted that, at this time and based on current trends, it is comfortable with the published annual earnings estimate for fiscal 2004 of $4.00 per diluted share.
Sanderson Farms, Inc. is engaged in the production, processing, marketing and distribution of fresh and frozen chicken and other prepared food items. Its shares trade on the Nasdaq Stock Market under the symbol SAFM.