Net income for the quarter was $23.9 million, or $1.04 per share, compared to a net loss of $16.3 million, or 74 cents per share in the comparable year-ago period.
Net sales advanced 24 percent to $595 million, compared to $479.3 million in 2011, the company said.
Market prices for poultry products were higher during the second quarter. Based on a simple average of the Georgia dock price for whole chickens, prices increased approximately 7.5 percent in the second quarter, the company said. Bulk leg quarter market prices were 22.4 percent higher compared with the year-ago period, and reflected continued strong exports and demand. Boneless breast meat prices during the second quarter were 2.3 percent higher than in 2011, while jumbo wing prices were up 121.5 percent for the second quarter of 2012 compared with the same year-ago period, according to the company.
“The results for our second quarter of fiscal 2012 reflect improved market conditions driven primarily by a decrease in the supply of poultry products," said Joe F. Sanderson, Jr., chairman and chief executive officer of Sanderson Farms. “Our net sales were 24.1 percent higher than during the second quarter of fiscal 2011, reflecting increased production and higher average sales prices of chicken.
“We sold approximately 10.8 percent more pounds of poultry products during the quarter as a result of increased production at our Kinston, North Carolina facility,” Sanderson said. “This increase was partially offset by our previously announced four percent production cut at our other facilities. Demand for chicken remains steady from retail grocery store and export customers. However, demand from our casual dining customers remains soft, and we expect this trend will continue with macroeconomic concerns and continued high unemployment affecting consumers’ spending decisions.
Sanderson said the company’s profitability was negatively impacted by high feed costs. Prices paid for corn and soybean meal decreased 6.44 percent and 15.19 percent, respectively, compared with the second quarter of fiscal 2011. But feed prices remained high relative to historical costs, Sanderson said.
“Because of the tight supply of both corn and soybeans, we expect grain prices to remain high and volatile at least until markets get some visibility on the quantity and quality of this year’s corn and soybean crops.
“While there is some degree of optimism regarding the 2012 corn crop fueled primarily by the rapid planting progress this spring and the large number of acres expected to be planted, there is no margin for error with this year’s crop. Until the crop is harvested, we expect to pay higher prices, at least over the short term, for both corn and soybean meal,” Sanderson added.
Sanderson said the company will continue to monitor the chicken markets and production levels heading into the summer, which has usually seen higher demand for chicken.
“Weekly broiler egg sets continue to run below last year’s numbers, and breeder placements are lower. With economic conditions continuing to affect consumer behavior, we expect to see continued soft casual dining demand.
“However, market prices for boneless breast meat sold to our food service customers improved seasonally the first two weeks of May, and market prices for retail grocery store product have also moved higher. We believe these market improvements are supply driven and, while market conditions remain fluid, we will maintain our focus on our operating performance and sales execution,” Sanderson concluded.
