Sanderson Farms Q2 Profit More Than Doubles, Results Beat Estimates - Update

(RTTNews) - Poultry processor Sanderson Farms, Inc. (SAFM) Thursday reported a sharp increase in second-quarter profit, reflecting lower grain costs and continued favorable demand for poultry products. Net sales rose about 6 percent from last year. Earnings per share, as well as revenues topped analysts' expectations.

The company said feed costs in flocks processed decreased 19.1 percent from last year. According to the firm, demand for chicken remains strong from its retail grocery store customers, and relatively high prices of competing protein have shifted some consumer demand to chicken.

As macroeconomic factors have reduced customer traffic through food service establishments, relatively high priced beef contributed to improving demand and market prices, the company added.

"Looking ahead, we are reasonably optimistic as we head into the summer months and what is typically the peak demand period for chicken. Total grain costs have moved higher but remain below last year's prices, and demand for chicken products is expected to remain strong," said Joe Sanderson, Jr., chairman and chief executive officer of the company.

For the second quarter ended April 30, 2014, the company's net income more than doubled to $50.99 million or $2.21 per share from $24.37 million or $1.06 per share in the previous year.

On average, eight analysts polled by Thomson Reuters expected the company to report earnings of $1.70 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter increased 6.4 percent to $660.72 million from $621.2 million a year ago, reflecting increased volume, offset by slightly lower market prices. Wall Street expected revenues of $625.66 million for the quarter.

SAFM closed Wednesday's regular trading at $87.66, up 0.75 percent. In the pre-market activity on Thursday, the shares are up 3.81 percent.