August 27, 2008

Sanderson Farms has announced a net loss of US$3.6 million partly due to high feed costs.

The loss was partly due to high feed costs, as cash market prices for corn and soymeal delivered to the company during the third quarter skyrocketed by 30.7 percent and 52.4 percent on-year respectively. For the nine months that ended July 31, 2008, cash market prices of corn and soymeal jumped 25 percent and 47.3 percent respectively.

Net sales for the third quarter increased to US$466.9 million from US$394.8 million a year ago. Net results for the third quarter include US$1.7 million paid for the settlement of the company's donning and doffing litigation.

Net sales for the first nine months of fiscal 2008 reached US$1.26 billion compared with US$1.04 billion in the same period last year. Net income for the first nine months totalled US$8.8 million, a sharp decrease from US$54.8 million during the same period in 2007.

The results reflect difficult market conditions for the industry, according to Joe F. Sanderson Jr., chairman and chief executive officer of Sanderson Farms.

While chicken demand has remained relatively strong during the quarter, income has suffered due to weak economic conditions and higher fuel prices, Sanderson said, adding that the combination of higher feed costs and imbalance between domestic supply and demand in the foodservice markets have resulted in much lower margins.

In addition, the company's new facility in Waco, Texas is ready to swing to full production by October and will operate at about 90 percent capacity until market conditions warrant full production.