Sanderson Farms, which produces fresh and frozen chicken as well as other prepared food products, has booked a reduced net loss for the first quarter of US$2.8m, or $0.14 per diluted share, compared with $8.6m, or $0.43 per diluted share, for the first quarter of the 2006 fiscal year.

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Operating income for the first quarter of the last fiscal year had been hit by incurred but unrecognised lost profits and expenses of around $3.0m related to losses sustained as a result of Hurricane Katrina. Net sales for the first quarter of the current fiscal year rose from $236.2m to $292.7m.


“The results for the first quarter of fiscal 2007 showed improvement over the same period last year, although we still faced a challenging poultry market, particularly in the first half of the period,” said chairman and CEO Joe F. Sanderson, Jr. “Market prices were soft at the beginning of the quarter, but began to improve in December and have continued to trend higher through February. Overall, poultry prices were higher than the same period a year ago.”


However, Sanderson added that company continues to see higher and more volatile prices for corn and soybean meal, its primary feed ingredients, and the significantly higher costs had affected profitability during the quarter.


Sanderson said the company was pleased with its operating performance for the quarter. Full production had resumed in January following the production cuts implemented for the second half of the 2006 calendar year. Volumes had risen “significantly“ during the quarter as a result of the additional production from Moultrie, Georgia, the conversion of the company’s facility in Collins, Mississippi to big bird deboning, and the absence of the effects of Hurricane Katrina.

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The construction of Sanderson’s facility in Waco, Texas is ahead of schedule and the company said it expects to commence production there in the fourth fiscal quarter.


However, in spite of these positive factors, Sanderson warned that feed costs were expected to continue to rise. “While all of these factors, along with the favourable trends in chicken prices, are positive indicators for our business going forward in fiscal 2007, we expect our feed costs will continue to rise,” he said. “The demand for corn from ethanol producers is affecting market prices for corn and soybeans. However, we remain confident that the chicken and grain markets will strike a favourable balance over time.”