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Sanderson Farms Q2 Results Exceed Estimations

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Sanderson Farms, Inc. (NASDAQ: SAFM) announced better-than-expected results for the first quarter.

Sanderson Farms reported net income of $47.6 million or $2.11 a share for the second quarter, down from $71.2 million or $3.13 a share in the year-ago quarter. Analysts estimated the company to earn $1.52 a share for the second quarter.

Its net sales were $692.1 million, down from $716.6 million in the previous year quarter. This was higher than the Street estimations of $669.61 million.

The company's chairman and CEO, Joe Sanderson, reacted to the results to say, "The results for our second quarter of fiscal 2016 reflect lower grain costs, continued favorable demand for poultry products from retail grocery store customers, higher volume, and an improving export environment. While our sales price per pound decreased significantly during the first half of this fiscal year compared with last year, market prices improved steadily through the second fiscal quarter as poultry export market fundamentals improved."

He added, "Our net sales for the quarter reflect lower sales prices, offset by significantly more pounds sold. Our new Palestine, Texas, facility is running well as we continue to move toward full production, and we expect to reach that milestone in our fourth fiscal quarter. Poultry pounds sold increased 8.6 percent during the quarter compared with last year's second quarter. We also continue construction at the new hatchery, processing plant and waste water treatment facility in St. Pauls, North Carolina, and we expect to open the plant during our first fiscal quarter of 2017."

For the remainder of the year, the CEO said, "Looking ahead to the second half of the fiscal year, we continue to expect the benefit of lower grain prices. While market prices for feed grains have moved higher in recent weeks over concerns regarding South American production, planting progress in the United States for both corn and soybeans continues to go well. Getting the crops planted is only the first step toward the final harvest, but it is an important step."

Sanderson concluded by saying, "All avian influenza-related import bans on United States poultry products, except those in China, have been lifted, the value of the United States dollar relative to other currencies has moved lower in recent weeks, and the price of oil has moved higher from its bottom. These factors have given more buying power to many of our export partners, which has resulted in significantly lower frozen leg quarter inventories and, as a result, market prices for leg quarters moved higher and faster than we expected during the quarter."

Posted-In: Earnings News

 

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