Sanderson Farms Q3 Results Miss Estimates

(RTTNews) - Poultry processor Sanderson Farms, Inc. (SAFM) reported Tuesday a profit for the third quarter that increased from last year, reflecting revenue growth amid improved demand and higher poultry market prices. Both earnings per share and quarterly net sales missed analysts' expectations.

"Sanderson Farms' financial results for the third quarter of fiscal 2014 reflect continued favorable market conditions. Market prices for poultry products were higher than the third quarter of fiscal 2013, as the Georgia Dock whole bird price remained historically high during the quarter," Chairman and CEO Joe Sanderson, Jr. said in a statement.

The Laurel, Mississippi-based company reported net income of $76.08 million or $3.30 per share for the third quarter, higher than $67.92 million or $2.95 per share in the prior-year quarter.

On average, nine analysts polled by Thomson Reuters expected the company to report earnings of $3.82 per share for the quarter. Analysts' estimates typically exclude one-time items.

Net sales for the quarter improved to $768.40 million from $738.96 million in the same quarter last year, but missed six Wall Street analysts' consensus estimate of $789.20 million.

According to Sanderson, overall market prices for poultry products were higher in the third quarter from last year. As measured by a simple average of the Georgia dock price for whole chickens, prices increased about 5.3 percent.

The company said the higher Georgia Dock price reflects good retail grocery store demand. While boneless breast meat prices peaked below last year's high, they remained above $2.00 per pound through June and into July.

Cash prices for corn delivered to the company decreased 28.7 percent, while the price for soybean meal delivered to the Company increased 17.6 percent from the year-ago quarter.

"While market conditions were favorable during the quarter, financial results were affected by accruals booked for the Company's bonus award program and a contribution to the Company's employee stock ownership plan," Sanderson added.

The company noted that the quarter was negatively affected by lower than anticipated volume processed at its poultry plants, with 770.4 million pounds of fresh poultry being processed during the quarter, which is 44.7 million pounds fewer than projected in May.

The company said it is pleased with construction progress at its new Palestine, Texas-based facilities. It remains on target to begin processing chickens at the new facilities during the first calendar quarter of 2015.

SAFM closed Monday's regular trading session at $95.12, down $0.04 on a volume of 0.57 million shares.