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Sanderson posts loss, but sees market improving slightly
Story Date: 2/22/2013
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Source: MEATINGPLACE, 2/21/13
Sanderson Farms Inc. posted a first-quarter loss, below analyst expectations for breakeven results, as the company lagged competitors in raising chicken prices in response to improving demand.
“We left money on the table during our first quarter,” Chief Executive Joe Sanderson Jr. said on a conference call with analysts. Competitors began raising their prices on tray packs in August and September, while Sanderson Farms didn’t initiate price increases until November and December.
But the company has since caught up with the market, Sanderson said, and sales rose in January and should continue to improve going forward.
Market prices have risen despite slightly higher production. “That certainly indicates that demand has improved somewhat,” Sanderson said. The increased demand for chicken is being seen at the retail level, he said, while food service demand remains weak.
High prices for beef and pork are now boosting chicken sales at the retail level – the first time the company has observed an impact on chicken demand since prices for competing proteins have been climbing, Sanderson noted.
Improving economic conditions and a seasonal increase in demand for chicken in spring and summer should keep markets moving higher, he predicted.
The Laurel, Mississippi-based company has been running its plants at 6 percent below capacity but will return to full capacity by June, Sanderson added.
Construction of a new big bird deboning complex, now planned for Palestine, Texas, will remain on hold until the U.S. corn and soybean crops are harvested, he said. The company had originally planned to build the plant in Nash County, N.C., but pulled those plans three months ago after meeting opposition from local residents.
Sanderson reported a loss of $6.9 million, or 31 cents a share, in the quarter ended Jan. 31, compared with a loss of $8 million, or 36 cents a share, in the same period a year ago. Sales increased 15 percent to $595.8 million. Analysts had expected breakeven per-share earnings on revenue of $559.3 million, according to Thomson Reuters.
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