Sanderson reports first-quarter loss of $6.7 million

Sanderson Farms Inc. reported a net loss of $6.7 million, or $0.33 per share, for the first quarter of fiscal 2009 compared with net income of $6.2 million, or $0.30 per share, for the first quarter of fiscal 2008. Net sales were $388.9 million compared with $362.6 million for the same period a year ago.
The first-quarter results reflect prevailing economic conditions and reduced consumer demand for protein consumed away from home, according to Joe F. Sanderson, Jr., chairman and chief executive officer. "Demand for chicken products held steady in the retail grocery market, but the slowdown in restaurant traffic continues to adversely affect sales to our foodservice customers,” Sanderson said. “While market prices improved during the quarter compared to where the markets stood at the end of fiscal 2008, it was not enough to offset our costs. Grain prices for the quarter were actually down sequentially compared to our fourth quarter of fiscal 2008, but were still higher than last year's first quarter."
The company said chicken prices were mixed during the first quarter citing boneless breastmeat prices down 9% and jumbo wing prices up 6.5%.
"We do not expect demand to improve until the economy gains some traction and consumers resume spending and dining out again," Sanderson said. "We will continue to manage our operations as efficiently as possible through this cycle and we do not plan to return to full production until we see an improvement in market conditions. However, we do expect that our feed costs will be lower this year as grain prices are also being affected by the economy and reduced demand.
"We continue to believe market forces will balance supply and demand for our industry over the long-term. Until consumer demand returns, any market price improvement will have to come from supply side reductions," said Sanderson.