August 28, 2013

Sanderson Farms reports growth in Q3 2013 net sales

Sanderson Farms, Inc. reported that net sales for the third quarter of fiscal 2013 were US$739.0 million compared with US$624.9 million for the same period a year ago.

For the quarter, the company reported net income of US$67.9 million, or US$2.95/share, compared with net income of US$28.7 million, or US$1.25/share, for the third quarter of fiscal 2012.

Net sales for the first nine months of fiscal 2013 were US$1,955.9 million compared with US$1,737.7 million for the first nine months of fiscal 2012. Net income for the first nine months of fiscal 2013 totalled US$85.3 million, or US$3.71/share, compared with net income of US$44.6 million, or US$1.94/share, for the first nine months of last year.

"Sanderson Farms' financial results for the third quarter of fiscal 2013 reflect improved market conditions when compared to last year's third quarter," said Joe F. Sanderson, Jr., chairman and chief executive officer of Sanderson Farms, Inc.

"Market prices for poultry products were higher than the third quarter of fiscal 2012, as the Georgia Dock whole bird price remained historically high during the quarter. The Georgia Dock price reflects steady retail grocery store demand. In addition, market prices for wings, while below last year's third quarter levels, improved during the quarter. Boneless breast meat prices remained well above last year's prices and peaked in May as several quick serve restaurants and other food service establishments featured chicken on their menus."

Overall market prices for poultry products were higher in the third quarter of fiscal 2013 compared with prices in the third quarter of fiscal 2012. As measured by a simple average of the Georgia dock price for whole chickens, prices increased 11.6% compared with the third quarter of fiscal 2012. Boneless breast prices improved when compared to last year's third fiscal quarter, averaging 32.3% higher than the prior-year period. Jumbo wing prices averaged US$1.28 per pound for the third quarter of fiscal 2013, down 19.3% from the average of US$1.59/pound for the third quarter of fiscal 2012. The average quoted market price for bulk leg quarters was essentially flat during the quarter, averaging US$0.51 per pound during the third fiscal quarter of 2013 compared to US$0.50 during the third fiscal quarter of 2012. Cash prices for corn delivered to the company increased 8.1% compared with the third quarter a year ago, while the price for soymeal delivered to the company increased 10.3%. For the nine months ended July 31, 2013, the company's cash prices for corn increased 13.2% and soymeal increased 29.3% when compared to the nine months ended July 31, 2012.

"While poultry market prices improved during our third fiscal quarter, the company continued to experience higher grain prices compared with the same period last year," added Sanderson. "Market prices for grain have remained high through most of August, but favourable growing conditions this summer have fuelled considerable optimism about this year's corn and soy crops. While the available grain quantity and prices during the coming months will ultimately depend on this year's final crop performance, prices have recently moved lower. If we priced all of our needs for the remainder of the fiscal year at yesterday's market prices, cash paid for feed grains would be approximately US$79 million higher during fiscal 2013 compared to fiscal 2012. However, fourth quarter cash market prices would be US$65 million lower than last year's fourth quarter. We have priced our grain needs through August but will be on the market for our needs starting in September."

"We are also pleased to report that our due diligence and related permitting processes are substantially complete for our previously announced Palestine, Texas facility," said Sanderson. "Most conditions precedent to breaking ground on the new poultry complex have been met, and we hope to finalise a date to begin construction of the new feed mill, hatchery, processing plant and wastewater treatment facilities in September, subject to final approval by our board of directors."