020601 Sanderson Reports Q2 ResultsJune 1, 2002
Laurel, MS - Sanderson Farms, Inc. reported results for the second fiscal quarter and six months ended April 30, 2002.
Net sales for the second quarter of fiscal 2002 were $175.4 million, up 7.2% compared with $163.6 million for the same period a year ago. For the quarter, the Company reported net income of $7.7 million, or $0.58 per diluted share, compared with net income of $5.0 million, or $0.37 per diluted share, for the second quarter of fiscal 2001.
For the six months ended April 30, 2002, the Company reported net sales of $339.9 million, up 7.7% from net sales of $315.7 million for the first half of fiscal 2001. The Company reported net income of $13.0 million, or $0.97 per diluted share, for the first half of fiscal 2002 compared with net income of $5.4 million, or $0.40 per diluted share, for the year-earlier period.
During the second fiscal quarter, the Company recognized $1.6 million, net of income taxes, or $0.12 per diluted share, for Sanderson Farms' share in the settlement of a class action lawsuit against a vitamin supplier for overcharges. Excluding this special item, net income was $6.1 million, or $0.46 per diluted share, for the second quarter of fiscal 2002, and $11.4 million, or $0.85 per diluted share, for the six months ended April 30, 2002.
"We are very pleased with the continued strength of our financial and operating performance in the second fiscal quarter," commented Joe F. Sanderson, Jr., president and chief executive officer of Sanderson Farms, Inc. "These results are particularly gratifying considering the softness in dark meat market prices we experienced compared with the prior quarter. Our ability to execute in this environment reflects the strength of our operating model and our capacity for delivering a product mix that favorably meets the current demands of the market."
According to Sanderson, market prices for poultry products during the quarter were mixed. As measured by a simple average of the Georgia dock price for whole chickens, prices increased approximately 1.3% in the Company's second fiscal quarter compared with the same period in 2001, but were approximately 1.3% lower than the first quarter of fiscal 2002. Boneless breast meat prices during the quarter averaged $1.25 per pound, or 6.4% lower than the same period a year ago. The most dramatic shift in market prices occurred for leg quarters and wings. Bulk leg quarters decreased during the quarter due in part to the Russian embargo of U.S. poultry meat and the resulting increase of product in the domestic market. Market prices for bulk leg quarters during the second quarter of fiscal 2002 averaged 10.6% below the second quarter last year. Wing prices averaged $0.64 per pound, or 29.7% below last year's second fiscal quarter.
Cash market prices for feed grains were flat during the second fiscal quarter compared to the same quarter a year ago and to the Company's first fiscal quarter. Soybean meal cash market prices increased 0.7% compared to the second quarter a year ago, and decreased 0.6% compared to the Company's last fiscal quarter. Corn prices decreased 0.6% compared to the second quarter of 2001, and decreased 2.2% compared to the Company's first fiscal quarter of 2002.
"Like others in our industry, our export business has been impacted by the ban on United States poultry products imposed on March 10, 2002 by Russia, the world's largest poultry importer," said Sanderson. "We believe the Russian embargo, and the subsequent adverse impact on market prices for leg quarters, cost the Company approximately $1.6 million, net of income taxes, or $0.12 diluted per share, during the second fiscal quarter. While the ban officially ended on April 15, poultry shipments to Russia still have not fully resumed, creating continued pricing pressures in the market. We do expect, however, that shipments to Russia will slowly move toward normalization. As such, we remain cautiously optimistic about our prospects for the year and look forward to a more stable pricing environment."
The Company also stated that, based on quarter-to-date trends and internal projections, it remains comfortable with an annual earnings estimate of $2.00 to $2.20 per share for the fiscal year 2002.
Sanderson Farms, Inc. is engaged in the production, processing, marketing and distribution of fresh and frozen chicken and other prepared food items. Its shares trade on the Nasdaq Stock Market under the symbol SAFM.