August 24, 2010

Sanderson earnings go down in Q3 of 2010

Weaker market prices for poultry pushed Sanderson Farms earnings down during the third quarter of fiscal 2010.

Net income for the quarter ended July 31 was US$36,116,000, equal to US$1.55 per share on the common stock, down 16% from US$43,048,000, or US$2.06 per share, during the same period of fiscal 2009.

Sales for the quarter were US$489,096,000, down 3% from sales of US$504,846,000 during 2009.

"Sanderson Farms' financial results for the third quarter of fiscal 2010 reflect favorable market conditions and solid execution in our operations, offset by the effect of the extreme heat on our live operations. Market prices for poultry products were lower than last year's third quarter. Retail grocery store demand has remained strong, although food service demand has remained sluggish, and will likely remain that way until the employment market gains traction and more consumers return to restaurants," said Joe F. Sanderson Jr., chairman and chief executive officer of Sanderson Farms, Inc.

"Overall, our operations continue to run well, resulting in solid operating margins for the third quarter. We were also able to benefit from slightly lower costs for corn and soybean meal, our primary feed ingredients, compared with the same period a year ago. Despite lower grain costs, live production costs were negatively affected by the extreme heat across our production areas. Heat negatively impacts live weights and feed conversions, which in turn results in fewer pounds processed and sold," the chairman added.

Mr. Sanderson said the development of the company's new poultry processing complex in Kinston, North Carolina, remains on schedule. "We have moved into the hatchery, the feed mill will be completed soon, and we expect to begin processing birds in January 2011," he said.

Net income for Sanderson Farms for the first nine months of fiscal 2010 was US$87,020,000, or US$3.96 per share. The results compared favourably to the same period during fiscal 2009 when earnings were US$62,515,000, or US$3 per share. Sales for the period were US$1,396,320,000, up 6% from the first nine months of 2009 when sales were US$1,320,489,000.