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SANDERSON SLIPS IN SECOND QUARTER
posted by admin on 30/05/06
“The combination of sluggish demand for poultry products in the domestic market with the decline in exports have depressed market prices”
Laurel, Mississippi-headquartered poultry processor Sanderson Farms reported that net sales for the company’s fiscal 2006 second quarter are at $225.1 million – more than 13 percent lower than the $259.2 million for 2005 second quarter.
Net sales for the first six months of fiscal 2006 were $477.2 million compared with $492.5 million for the first half of fiscal 2005. Net loss for the first half of the year totaled $25.3 million compared with net income of $36.6 million for the first six months of last year.
“Our financial results for the second quarter of fiscal 2006 reflect a difficult market environment for our industry,” Joe Sanderson Jr., chairman and CEO of Sanderson Farms, commented. “The combination of sluggish demand for poultry products in the domestic market with the decline in exports have depressed market prices compared with the levels we experienced in the prior year period.”
According to a company news release, overall market prices for poultry products were significantly lower in the second quarter of 2006 compared with prices a year ago. As measured by a simple average of the Georgia dock price for whole chickens:
* Prices decreased approximately 7.3 percent in the company's second fiscal quarter compared with the same period in 2005.
* Bulk leg quarter prices declined 43.1 percent during the quarter compared with last year's second quarter. These leg quarter prices reflect continued weak demand in the export market during the quarter.
* Boneless breast meat prices during the quarter were approximately 30.1 percent lower than the prior-year period.
* Wing prices averaged $0.91 per pound during the second quarter of fiscal 2006, compared with the average of $1.05 per pound during the second quarter of fiscal 2005.
At the same time, cash market prices for corn and soybean meal – the company's primary feed ingredients – increased 6.5 percent and decreased 4.1 percent, respectively, compared with the second quarter one year ago.
“While current market conditions are better than those experienced during our second quarter, they remain challenging,” Joe Sanderson said. “In light of these conditions, we are reducing our production levels at all of our big bird deboning plants and at our McComb, Mississippi, chill-pack plant. Total weekly production will be reduced approximately 4.3 percent to more appropriately balance our production with current market demand. We will also defer the additional head previously scheduled to begin in Collins, Mississippi, in July, and a portion of the additional head previously scheduled for Moultrie, Georgia, until market conditions improve.”
He added: ”We have reviewed all of our internal operating budgets and have identified opportunities to reduce our selling, general and administrative expenses without jeopardizing product quality, customer service, or long-term operations. Additionally, we have decided to postpone construction on our new poultry complex in Waco, Texas, for 90 days, which will defer approximately $29 million of related capital expenditures to fiscal 2007.
Web posted: May 26, 2006
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