Sanderson Farms reported results for the third fiscal quarter and nine months ended July 31, 2016.
Net sales for the third quarter of fiscal 2016 were $728.0 million compared with $739.9 million for the same period a year ago. For the quarter, the Company reported net income of $54.7 million, or $2.42 per share, compared with net income of $50.9 million, or $2.27 per share, for the third quarter of fiscal 2015.
Net sales for the first nine months of fiscal 2016 were $2,025.2 million compared with $2,123.9 million for the first nine months of fiscal 2015. Net income for the first nine months of fiscal 2016 totaled $113.0 million, or $5.01 per share, compared with net income of $188.6 million, or $8.28 per share, for the first nine months of last year.
"Sanderson Farms' financial results for the third quarter of fiscal 2016 reflect a continued favorable balance of the supply and demand for fresh chicken sold to retail grocery store customers," said Joe F. Sanderson, Jr., chairman and chief executive officer of Sanderson Farms, Inc.
"That balance was reflected in a Georgia Dock whole bird price that, while lower on average than during last year's third fiscal quarter, remained strong during the current third fiscal quarter. Market prices for products from our plants that process a larger bird were mixed during the quarter when compared with last year's third fiscal quarter.
Bulk leg quarter prices came under pressure during last year's third fiscal quarter as a result of weak export demand due to bans on United States poultry products related to the discovery of avian influenza in the United States, a relatively strong United States dollar and lower oil revenue in countries with oil-based economies.
Market prices for bulk leg quarters were higher this year as all avian influenza-related import bans have been lifted except for China's, but prices remain below historical averages as the other headwinds remain.
Food service traffic and demand in the United States remain stubbornly static, and flat demand combined with additional industry production and higher domestic poultry supplies as a result of lower exports kept a lid on market prices for boneless breast meat during our third fiscal quarter. However, market prices for boneless breast meat have moved significantly higher during August."
According to Sanderson, compared with the third fiscal quarter of 2015, the average Georgia Dock price for whole chickens was approximately 3.6 percent lower, boneless breast meat prices were lower by approximately 12.7 percent, the average market price for bulk leg quarters increased approximately 29.6 percent, and jumbo wing prices were lower by 3.6 percent.
The Company's average feed cost per pound of poultry products processed decreased 1.76 cents per pound, or 6.5 percent, compared with the third quarter of fiscal 2015, and prices paid for corn and soybean meal, the Company's primary feed ingredients, increased 2.5 percent and decreased 6.9 percent, respectively, compared with the third quarter of fiscal 2015.
"We continue to be pleased with progress at our new Palestine, Texas facilities," said Sanderson. "The plant is now operating at near full capacity, and the startup has been well executed. Construction continues on our new St. Pauls, North Carolina facilities, and we look forward to the opportunities the new facilities will provide to our shareholders, our customers and our employees when we begin processing at the new plant during our first fiscal quarter of 2017."
Sanderson Farms, Inc. is engaged in the production, processing, marketing and distribution of fresh and frozen chicken and other prepared chicken items. Its shares trade on the NASDAQ Global Select Market under the symbol SAFM.
