Sanderson Farms beats profit and sales expectations, as improved chicken demand offset higher feed costs
Sanderson Farms Inc. reported Thursday fiscal second-quarter profit and sales that rose above expectations, as improved poultry markets more than offset "significantly higher" feed grain costs. Net income for the quarter to April 30 rose to $96.9 million, or $4.34 a share, from $6.1 million, or 28 cents a share, in the year-ago period. The chicken producing, processing and distributing company said results included an income tax benefit of $37.4 million related to loss carry-back provisions allowed by the CARES Act. The FactSet consensus for net earnings per share was $3.20. Sales rose 34.2% to $1.13 billion, beating the FactSet consensus of $1.05 billion. Overall realized prices for chicken products increased 32.6%, while average feed costs per pound rose 26.6% and prices paid for corn and soybean meal grew 39.7% and 40.0%, respectively. "The improvement in the domestic poultry markets was driven largely by increased demand from food service customers, as U.S. consumers slowly returned to restaurants and several quick serve restaurant chains featured chicken sandwiches on their menus," said Chief Executive Joe Sanderson, Jr. The stock, which was still inactive in premarket trading, has run up 26.3% year to date, while the S&P 500 has gained 11.7%.
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