December 21, 2011

Sanderson Farms Inc. (SAFM) fluctuated to a fourth-quarter loss as its margins continued to sink amid high feed costs.

The latest quarter marked the fourth straight loss for Sanderson. Its industry has been challenged by rising feed costs, a chicken glut and weak prices despite a buoyant export market. Rival Pilgrim's Pride Corp. (PPC) in October reported its third consecutive quarterly loss, as the higher cost of chicken feed continued to outpace sales revenue.

Chief Executive Joe F. Sanderson Jr. described 2011 as a challenging fiscal year, saying the results reflect a combination of a weaker poultry market and significantly higher feed grain costs, both happening throughout the year.

In the latest quarter, Sanderson said boneless chicken-breast prices dropped 19% from the year earlier while the average price for bulk leg quarters rose 30%, with relatively strong dark meat prices reflecting good export demand during the year. Meanwhile, the company's prices for corn and soy meal surged 73% and 24%, respectively.

For the quarter ended October 31, Sanderson Farms reported a loss of US$21.6 million, or US$0.97 a share, from a year-earlier profit of US$47.8 million, or US$2.08 a share. The latest period included live-inventory related charge of US$0.27. Revenue increased 5.8% to US$559.8 million.

Analysts polled by Thomson Reuters most recently forecast a loss of US$0.59 on revenue of US$536 million.

Shares closed Monday at US$50.68 and were inactive premarket. The stock is up 29% year to date.