September 27, 2011

Cal-Maine Foods' Q1 earnings decline 35%

Cal-Maine Foods Inc.'s (CALM) fiscal Q1 earnings decreased 35% as expensive feed prices continued to affect the biggest US egg producer and distributor.

The owner of Eggland's Best and Farmhouse egg brands began to get hurt late last year by rising feed costs, which surged 45% in the latest quarter. President and Chief Executive Dolph Baker said Monday (Sep 26) the company expects feed costs to remain high and volatile for the year ahead.

Still, sales have continued to improve from weak levels during the recession, helped by higher average retail prices.

The company, whose quarterly dividend is linked to profits, will pay holders US$0.044 a share for the latest quarter, down sharply from US$0.102 in the previous quarter.

For the quarter ended August 28, Cal-Maine reported a profit of US$3.1 million, or US$0.13 a share, down from US$4.8 million, or US$0.20 a share, a year earlier. Revenue increased 28% to US$243.8 million thanks to higher prices and improved demand.

Gross margin fell to 13.9% from 17.2%.

Shares closed Friday (Sep 23) at US$30.43 and were inactive premarket. The stock is down 3.6% in the past year.