August 19, 2011


Cagle's suffers greater loss over revenue



Cagle's Inc. has suffered a net loss of US$5.7 million, or US$1.24/share, against net income of US$3.5 million, or US$0.75/share, for the quarter ended July 3, 2010.


Net sales totalled US$81.9 million, up 4.2% from US$78.6 million, reflecting an increase in lbs. sold of 14.9% and a decrease in sales price for poultry of US$0.059 per lb. as compared to the same period of fiscal 2011.


For the first quarter of fiscal 2012 versus the same period last year, quoted market price changes for products were leg quarters increased 27.4%, boneless breast decreased 17.6%, breast tenders decreased 11.8%, wing markets decreased 40.3% and whole birds without giblets were unchanged.


Cost of sales for the first quarter of fiscal 2012 increased 27.1% as compared with the same period last year, from US$68.2 million to US$86.7 million. Feed ingredient prices for broilers processed in the first quarter of fiscal 2012, which represented 46% of the total cost of sales, increased 68.3%, or US$16.3 million, compared to the first quarter of fiscal 2011.


Profitability continues to be challenged by high feed cost accentuated by broiler markets pressured by over production. Effective at the end of August, Cagle's will have executed a further reduction in production at its Pine Mountain Valley plant resulting in the company processing 22% less head than capacity. Towards the end of July, industry began to react in kind with egg sets 6% less than the same period in 2010. In the coming months, such industry cut backs should have a positive effect on markets and final margins.

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