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Sanderson earnings fall in second quarter

By JACK WEATHERLY

Sanderson Farms Inc. reports net income of $41.9 million, or $1.84 per share, for its second fiscal quarter, which ended April 30, compared with net income of $67 million, or $2.95 per share, for the second quarter of fiscal 2017.

The release in premarket trading on May 24 drove Sanderson shares on the NasdaqGS market down as the company did not meet the FactSet consensus of $2.22 earnings per share and sales of $834 million.

Net sales for the quarter were $813.5 million, compared with $802 million a year earlier.

Sanderson shares fell that day to nearly 23 percent for the year, according to MarketWatch.

The 52-week range is $176.43 to $100. Shares were trading at $102.92 at 1:45 p.m. on Tuesday, up $1.96, or 1.94 percent.

The price for boneless breast meat and jumbo wings fell as food-service demand pushed downward in April as a cold wet spring “kept consumers indoors,” Chairman and Chief Executive Joe F. Sanderson Jr. said in a release.

“Lower average sales prices were offset during the quarter by more pounds sold, as our new St. Pauls, [N.C.] facility is running at full capacity. Poultry pounds sold increased 3.1 percent during the quarter compared to last year’s second quarter,” added Sanderson.

Net sales for the first six months of fiscal 2018 were $1.59 billion, compared with $1.49 billion for the same period of fiscal 2017. Net income for the first half of the year totaled $93.2 million, or $4.08 per share, compared with net income of $91 million, or $4 per share, for the first six months of last year.

Prices in retail grocery store sales remained relatively strong during the quarter, and continue to reflect good demand, but compared with the second fiscal quarter of 2017, boneless breast meat market prices were approximately 5.3 percent lower, the average market price for bulk leg quarters increased approximately 6.2 percent, and jumbo wing market prices were lower by 23.6 percent, according to the release. Market prices for chicken breast tenders averaged 4.7 percent lower than a year ago.

The company’s average feed costs per pound of poultry products processed decreased by 3.3 percent. .

“Looking ahead to the second half of the fiscal year, we expect grain prices to be somewhat higher as we move through the crop growing season,” added Sanderson. “While there are ample supplies of both corn and soybeans worldwide, a slow start to the United States planting season for 2018 corn and soybean crops as a result of the cold, wet spring in the United States grain belt put upward pressure on market prices. Farmers quickly made up that early deficit, and planting progress is now on pace with historical averages. Grain market participants will now turn their attention to trade issues and weather during the growing season.”

“While the USDA reports that the United States broiler breeder flock is 4 percent larger than a year ago, the agency also reports that egg production, hatch rates and livability are trending below last year. The current USDA forecast for United States broiler production during calendar 2018 to increase approximately 1.6 percent over calendar 2017 seems reasonable, but even this lowered estimate could prove to be high should these production trends continue. We expect our production during our third and fourth fiscal quarters of 2018 to be up 2.8 percent and down 4.7 percent, respectively, compared to the same quarters of fiscal 2017,” Sanderson concluded.

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