Source:  Chris Scott, MEATINGPLACE, 5/24/11

Sanderson Farms Inc. today cited a slight reduction in net sales and significantly higher feed costs while reporting a loss of $0.74 per share in the second quarter of fiscal 2011 versus a profit of $1.62 per share in the same period one year ago,

The quarterly loss for the period ended Apr. 30 was below analysts’ consensus estimates of $0.86 a share and reflects current market conditions, according to Chairman and CEO Joe Sanderson Jr., who told analysts this morning that feed costs will be an estimated $334 million higher this year compared with 2010 levels based on prices as of yesterday.

“Our grain prices are set through July, but we see higher corn and soy costs though the rest of 2011 compared with 2010,” Sanderson said. “We have very strong export demand, especially for dark meat but there’s too much supply of white meat.”

Sanderson added that the company is experiencing continued weakness in the foodservice sector, which he feels will not abate until employment levels improve and energy costs come down.

Industry analysts were not surprised by the results and increased the degree of projected losses for fiscal 2011. Farha Aslam of Stephens Inc. lowered her estimate for the fiscal year loss to $1.49 a share from $1.41 as a result of the second-quarter results. Aslam added that there might be lower production in the second half of 2011 as some producers cease operations or exit the business, which could affect Sanderson’s operations.
 

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