US egg producer Cal-Maine Foods has seen half-year profits slump thanks to weaker demand from the egg products sector and the foodservice channel.
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The company posted net income of US$38.4m for the six months to 29 November, down from $58.1m a year earlier. The fall in profits came despite a rise in revenue from $402.3m a year ago to $445.2m.
Chairman and CEO Fred Adams Jr said Cal-Maine was “generally pleased” with its performance in the second quarter of its fiscal year. Net income dropped 32.3% to $27.2m despite quarterly sales rising 6.5% to $238.3m.
“Our financial results reflect good demand for eggs at the retail level, but a declining demand for eggs from the institutional and food service sector,” Adams said on Monday (29 December). “Sales to the egg products industry were weaker, reflecting the slowing economy and credit challenges for the importers of dried and frozen eggs around the world.
“However, our feed costs were lower than the previous quarter with both corn and soy bean meal prices moving sharply lower through the second quarter. All of our operations ran smoothly during the quarter.”
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By GlobalDataAdams said Cal-Maine’s foodservice and egg products industry customers would continue to face problems in the months ahead.
“We see continued strong egg demand at retail, with slower demand from the foodservice and the egg products industries as participants work through current credit issues,” he said.
“We expect total egg supply to be in balance with demand. Feed costs, while much improved, will likely remain relatively high and could be volatile in the year ahead.”
