LAUREL, Miss. – Sanderson Farms Inc. reported higher net income and net sales for the third quarter.
Net income for the third quarter ended July 31, 2019 was $53.4 million, or $2.14 per share, compared with net income of $11.5 million, or $0.50 per share, for the third quarter of 2018. The company noted that net income for the third quarter of fiscal 2019 reflects an accrual for probable liability for a contribution to the company’s employee stock ownership plan of $2.7 million before income tax, or $0.10 per share net of income tax, compared to $2.4 million before income tax, or $0.08 per share net of income tax, for the same period a year ago.
Net sales for the third quarter were $945.2 million compared with $852.4 million reported in the year-ago period.
Higher average prices for dark meat, jumbo wings and chicken tenders offset weakness in market prices for boneless breast meat, according to Joe F. Sanderson Jr., chairman and CEO of Sanderson Farms.
“Similar to last year’s third fiscal quarter, Sanderson Farms’ financial results for the third quarter of fiscal 2019 reflect significant counter-seasonal weakness in market prices for boneless breast meat produced at our plants that process a larger bird for foodservice customers,” Sanderson explained. “Fortunately, market prices for other products produced at those plants were higher than last year, and reflected good demand during the quarter. Average market prices for dark meat, jumbo wings and chicken tenders were all higher than the same period a year ago. Average realized prices for poultry products produced for retail grocery store customers were slightly higher than last year’s third fiscal quarter and continue to reflect a more balanced supply and demand environment.”
Sanderson said market prices were lower by approximately 3.2 percent for jumbo boneless breast meat, while the average market price for bulk leg quarters advanced approximately 17.1 percent. Market prices for jumbo wings were higher 37.6 percent higher.
“The USDA expects chicken production growth of 1.7 percent during calendar 2019 compared to 2018, which alone shouldn’t be a burdensome supply number,” Sanderson added. “However, market prices for boneless breast meat produced at our plants that process a larger chicken for foodservice customers remain under pressure. As always, we will manage our business consistently regardless of market cycles.”
Feed costs were lower for Sanderson during the third quarter. Corn prices eased 1.4 percent, while soybean meal prices decreased 18.0 percent compared to the third quarter of 2018, the company said.
Net sales for the first nine months of fiscal 2019 were $2,533.8 million compared with $2,437.9 million for the first nine months of fiscal 2018, Sanderson reported.
Net income for the first nine months totaled $76.2 million, or $3.44 per share, compared with net income of $104.6 million, or $4.58 per share, reported in the first nine months a year ago. Net income for the first nine months of fiscal 2018 reflects a one-time non-cash benefit of $37.5 million, or $1.64 per share, as a result of an adjustment to the Sanderson’s deferred income tax liability to reflect a lower tax rate resulting from the federal tax reform legislation passed during the first fiscal quarter of 2018.