Sanderson Farms net income drops by two-thirds in Q4

Sanderson Farms saw its net income drop by more than two-thirds in the fourth quarter of fiscal year 2015, citing lower market prices for poultry products as a significant factor in the drop. The quarter and fiscal year both ended on October 31.
The company’s net income for the quarter was $27.4 million, down from a net income of $93.1 million during the fourth quarter of fiscal year 2014. For the year, Sanderson Farms’ net income dropped from $249 million to $216 million.
Net sales for the company were also down, hitting $679.6 million in the fourth quarter, a drop from the $760.9 million in net sales for the fourth quarter of 2014. For the year, however, net sales were up to a record $2.803 billion. The company’s net sales for fiscal year 2014 were $2.775 billion.
"While conditions during the fourth quarter of fiscal 2015 deteriorated in the big bird deboning market, the quarter marked the end of another successful year for Sanderson Farms," said Joe F. Sanderson, Jr., chairman and CEO of Sanderson Farms, Inc. "We reported record annual sales of $2.803 billion, a 1.0 percent increase over fiscal 2014. While overall poultry market prices declined compared with fiscal 2014, grain prices were significantly lower during the year when compared with fiscal 2014. For the year, we sold 3.418 billion pounds of dressed poultry, another record, compared with 3.045 billion pounds in fiscal 2014."
According to Sanderson, overall market prices for poultry products were significantly lower in the fourth quarter of fiscal 2015 compared with prices a year ago. As measured by an average of the Georgia dock price for whole chickens, prices were higher by approximately 1.2 percent in the company's fourth fiscal quarter compared with the same period in fiscal 2014, and were higher by 5.6 percent for the fiscal year compared with the prior year. The Georgia Dock whole bird price remained in record territory during fiscal 2015 and reflected strong demand for the company's retail chill pack product during this fiscal year. Boneless breast meat prices averaged 29.5 percent lower in the fourth quarter than the prior-year period. For fiscal 2015, boneless prices were 15.4 percent lower when compared with fiscal 2014. Jumbo wing prices averaged $1.48 per pound during the fourth quarter of fiscal 2015, down 1.3 percent from the average of $1.50 per pound during the prior-year period. Jumbo wing prices averaged $1.52 per pound during the fiscal year, up 26.9 percent from the average of $1.20 per pound for fiscal 2014. The average market price for bulk leg quarters decreased approximately 53.3 percent for the quarter, and decreased approximately 31.5 percent for fiscal 2015. Lower dark meat prices reflect the significant decline in industry export volumes during the second half of fiscal 2015. Cash prices for corn during the fourth fiscal quarter increased slightly by 0.4 percent, while soybean meal cash prices were down 21.2 percent.
Sanderson added that its profitability during the fiscal year allowed the company to fund its planned expansion in Palestine, Texas, further reduce outstanding debt, strengthen its balance sheet, and reward shareholders with a special dividend," Sanderson continued.
"We are well positioned to continue our growth strategy as we continue to move our new poultry complex in Palestine, Texas, to full production and continue construction of our newest complex in St. Pauls, North Carolina. The pounds produced in Palestine and St. Pauls, at full production, will represent a 32 percent increase in our capacity."