August 26, 2009

Mississippi-based Sanderson Farms has reported a higher-than-expected third quarter profit, thanks to lower poultry feed costs and higher chicken prices.

Sanderson reported a profit of US$43 million or US$2.09 per share for the third quarter ended July 31, compared with a year-ago loss of US$3.6 million or 18 cents per share.

Analysts on average had expected US$1.88 per share, according to Reuters Estimates.

Sales reached nearly US$505 million, compared with US$467 million a year ago.

J.P. Morgan analyst Ken Goldman said the performance was surprising, and this may be the best quarter in Sanderson Farms' history.

Prices for breast meat, a key revenue item sold in stores and restaurants, were up 3.4 percent during the quarter, and leg quarters, which are commonly exported, were down nearly five percent.

While retail demand for chicken remained relatively stable during the quarter, casual dining and food service demand continues to be negatively affected by weak economic conditions, CEO Joe Sanderson said.

Costs of corn and soymeal, key chicken feeds, were down 26.7 percent and 1.2 percent, respectively, in the quarter.

Sanderson's new Waco, Texas, plant is now in full production and the company will break ground in September for a new plant in Kinston, North Carolina.