Sanderson Farms Inc. reported results for the fourth quarter and fiscal year ended October 31, 2011. Net sales for the fourth quarter of fiscal 2011 were $559.8 million compared with $529.1 million for the same period a year ago. For the quarter, the company reported a net loss of $21.6 million, or $0.97 per share, compared with net income of $47.8 million, or $2.08 per share, for the fourth quarter of fiscal 2010. The net loss for the quarter includes an adjustment of $9 million, or $0.27 per share net of income taxes, to record live inventories on hand at October 31, 2011, at the lower of cost or market as required by generally accepted accounting principles.

Net sales for fiscal 2011 were $1.978 billion compared with $1.925 billion for fiscal 2010. The net loss for the year totaled $127.1 million, or $5.74 per share, compared with net income of $134.8 million, or $6.07 per share, for last year. The net loss for the fiscal year also includes the inventory adjustment described above.

"The fourth quarter of fiscal 2011 marked the end of a challenging year for Sanderson Farms and the poultry industry,” said Joe F. Sanderson, Jr., chairman and CEO of Sanderson Farms. "We reported record annual sales of $1.978 billion, a 2.7 percent increase over fiscal 2010. However, we also reported a record net loss of $127.1 million, or $5.74 per share. Our results reflect the combination of weaker poultry markets throughout the year and the significantly higher feed grain costs we experienced during the entire year. For the year, we sold 2.794 billion pounds of dressed poultry, another record, compared with 2.570 billion pounds in fiscal 2010.”

According to Sanderson, overall market prices for poultry products were lower in the fourth quarter of fiscal 2011 compared with prices a year ago. As measured by a simple average of the Georgia dock price for whole chickens, prices were higher by approximately 1.5 percent in the company's fourth fiscal quarter compared with the same period in fiscal 2010, and were higher by 1.7 percent for the fiscal year compared with the prior year. The higher Georgia Dock whole bird price reflects steady demand for the company’s retail chill pack product during this fiscal year. On the other hand, food service demand has remained very weak. That weakness is reflected in boneless breast meat prices, which averaged 19.1 percent lower in the fourth quarter than the prior-year period. For fiscal 2011, boneless prices were 14.5 percent lower when compared with fiscal 2010. Jumbo wing prices averaged $0.87 per pound during the fiscal year, down 31.6 percent from the average of $1.27 per pound for fiscal 2010. The average market price for bulk leg quarters increased approximately 29.8 percent for the quarter, and increased approximately 19.2 percent for fiscal 2011. The relatively strong dark meat prices reflect good export demand during the year. Prices paid for corn and soybean meal, the Company’s primary feed ingredients, increased significantly during the year and were up 73.0 percent and 23.5 percent, respectively, during the fourth fiscal quarter when compared with the fourth quarter a year ago. For the year, total feed costs in flocks sold were 38.8 percent higher than fiscal 2010.

“An important milestone for Sanderson Farms in fiscal 2011 was the start up of our new Kinston, N.C., poultry complex,” Sanderson continued. “This project was completed on time and on budget, and we began processing chickens in Kinston in January. We look forward to the new marketing opportunities the Kinston plant will provide for Sanderson Farms. The increased production at the Kinston plant during fiscal 2012 will more than offset the four percent production cut we announced in August at our other plants. We will institute that cut in January to better balance our production with our customers’ demand. Because we expect demand from our food service customers to remain soft until American consumers regain their confidence and the employment outlook brightens, we currently plan to leave our production cut in place through fiscal 2012.”

Sanderson concluded, “We are pleased that our balance sheet put us in the position to withstand the challenges of this past fiscal year. As of October 31, 2011, our balance sheet reflected $948.5 million in assets, stockholders’ equity of $506.9 million and net working capital of $324.3 million. Our total long-term debt at year-end was $273.7 million. We have often said that a strong balance sheet is an important advantage in today’s economic environment and provides us with the financial strength to not only support our growth strategy, but also to manage through conditions like we experienced during fiscal 2011. We deeply appreciate the hard work and dedication to excellence of everyone associated with our company, including our employees and growers.”

Source: Sanderson Farms Inc.