Bird flu takes its toll on US poultry processor

By Chloe Ryan

- Last updated on GMT

Related tags: Generally accepted accounting principles, Revenue, Influenza, Poultry

Sanderson: demand for US poultry is insufficient to keep pace with production as exports slump
Sanderson: demand for US poultry is insufficient to keep pace with production as exports slump
Sales and profits at poultry processing company Sanderson Farms in the US have been hit, as the aftershocks of the bird flu outbreak continue to be felt. 

Third quarter results for the period ending 31 July were published today. Net sales for the third quarter of fiscal 2015 were $739.9 million, nearly $30m lower than the same period a year ago, when sales totaled $768.4m. Profits for the quarter were $50.9m, or $2.27 per share, compared with net income of $76.1m, or $3.30 per share, for the third quarter of fiscal 2014.

“Market prices for most products produced at our big bird deboning plants were significantly lower during the quarter when compared to last year’s third fiscal quarter,”​ explained chairman and chief executive Joe Sanderson. “Bulk leg quarter prices remain under pressure as a result of weak export demand, affected by export bans related to the discovery of avian influenza in the US, a relatively strong US dollar and lower oil revenue in countries with oil-based economies.”

Sanderson said there was continued good demand for fresh chicken at retail grocery stores. While foodservice demand for poultry in the US continues to improve, that demand was not enough to keep pace with additional industry production combined with higher domestic supplies resulting from lower exports. “As a result, market prices for boneless breast meat remained under pressure during the quarter,”​ Sanderson said.

Stronger picture

The nine month figures paint a stronger picture than that of the third quarter. Net sales for the first nine months of fiscal 2015 were $2,123.9m compared with $2,014.0m for the first nine months of fiscal 2014. Profits for the first nine months of fiscal 2015 totaled $188.6m, or $8.28 per share, compared with net income of $155.9m, or $6.76 per share, for the first nine months of last year.

According to Sanderson, compared with the third fiscal quarter of 2014, the average price for whole chickens was approximately 4.5% higher, boneless breast meat prices were lower by approximately 25.4%, the average market price for bulk leg quarters decreased approximately 47.8%, and jumbo wing prices were higher by 29.5%.

The company’s average feed cost per pound of poultry products processed decreased 8.9 cents, or 24.7%, compared with the third quarter of fiscal 2014, and prices paid for corn and soybean meal, the company’s primary feed ingredients, decreased 13.2% and 34.5%, respectively, compared with the third quarter of fiscal 2014.

Related topics: Meat

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