Source: Chris Scott, MEATINGPLACE, 2/24/15


Sanderson Farms today cited higher poultry market prices, strong demand from retail customers and lower grain prices for a solid increase in sales and more than double the profits in the first quarter of fiscal 2015.

The Laurel, Miss.-based poultry processor posted sales of $667.4 million in the quarter ended Jan. 31, up 14 percent from results in the year-ago period. Net income reached $66.5 million ($2.87 a share), versus $28.9 million ($1.25 a share) in the first period of 2014.

Company officials told analysts that overall poultry prices were higher in the most recent period and lower grain prices combined to help fuel the improved results. Chairman and CEO Joe F. Sanderson, Jr. added that foodservice demand also climbed in the period, in part because of lower gasoline prices that sent families out of their homes for meals. Sanderson noted that the steep gas price drops positively influenced sales in December 2014 and January 2015 versus a gas price increase in February that slightly adversely affected foodservice sales.

Sanderson noted that the company will focus on three specific areas while also forecasting that chicken will continue to compete with high-priced beef for the remainder of 2015. They include: the quality and quantity of the chicken flock; an upcoming report on grain production for the year; and consumer spending trends as they relate to chicken supplies.

The company also said it “needs” a processing plant in the east in the form of a second facility in North Carolina and it expects to announce a site and construction dates “soon,” Sanderson said. The company is also looking at marketing spending plans, which could swell to as much as $13 million this year, compared with $8 million spent in 2014, company officials said.

Finally, despite a ban on U.S. chicken in Russia and China, Sanderson officials expressed optimism that the South African market will reopen to U.S. chicken exports, possibly sometime this year. Such a move could offset the effects of the other bans, according to Sanderson Farms officials.

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