Sanderson Farms Inc. recently reported results for the fourth quarter and fiscal year ended October 31, 2016.
Net sales for the fourth quarter of fiscal 2016 were $790.8 million compared with $679.6 million for the same period a year ago. For the quarter, the company reported net income of $76.0 million, or $3.36 per share, compared with net income of $27.4 million, or $1.22 per share, for the fourth quarter of fiscal 2015.
Net sales for fiscal 2016 were $2.816 billion compared with $2.803 billion for fiscal 2015. Net income for the year totaled $189.0 million, or $8.37 per share, compared with net income of $216.0 million, or $9.52 per share, for last year.
"The fourth quarter marked the end of another successful year for Sanderson Farms," said Joe Sanderson, Jr., chairman and chief executive officer of Sanderson Farms, Inc. "Market conditions strengthened at the beginning of our fourth fiscal quarter of 2016, although market prices declined seasonally after Labor Day.”
Despite the decline in market prices, Sanderson said the company reported record annual sales. Grain prices were also lower during the year when compared with fiscal 2015. Cash prices for corn during the fourth fiscal quarter decreased by 4.6%, while soybean meal cash prices were down 10.6%.
“For the year, we sold 3.731 billion pounds of dressed poultry, another record, compared with 3.418 billion pounds in fiscal 2015," he said.
According to Sanderson, despite lower prices for the full fiscal year, overall market prices for poultry products were higher in the fourth quarter of fiscal 2016 compared with prices a year ago, primarily as a result of improved export demand.
While the Georgia Dock pricing index remains under investigation, the company said prices, as measured by an average of the Georgia Dock price for whole chickens, were lower by approximately 4.0% in the company's fourth fiscal quarter compared with the same period in fiscal 2015, and were lower by 2.7% for the fiscal year compared with the prior year.
“The Georgia Dock whole bird price remained relatively strong during fiscal 2016, consistent with continued strong demand for retail grocery chill pack products and flat production,” the company said.
The Georgia Dock price index report was recently suspended after complaints arose about the price being much higher than other industry pricing sources.
Boneless breast meat prices averaged 7.4% higher in the fourth quarter than the prior-year period. For the full fiscal year, however, boneless prices were 12.5% lower when compared with fiscal 2015, reflecting continued weakness in food service demand.
“Unlike demand for chicken at retail grocery stores, food service demand remains relatively weak and somewhat volatile,” the company stated.
Jumbo wing prices averaged $1.62 per pound during the fourth quarter of fiscal 2016, up 9.5% from the average of $1.48 per pound during the prior-year period. Jumbo wing prices averaged $1.58 per pound during the fiscal year, up 3.9% from the average of $1.52 per pound for fiscal 2015. The average market price for bulk leg quarters increased approximately 46% for the quarter, but decreased approximately 6.2% for fiscal 2016.
The company said improved dark meat prices during its fourth fiscal quarter reflected the increase in industry export volumes during the second half of fiscal 2016, as most all Avian Influenza related bans on U.S. poultry meat were lifted.
"We are pleased that our profitability during fiscal 2016 allowed us to fund our planned expansion in St. Pauls, North Carolina, strengthen our balance sheet, and reward our shareholders with a special dividend," Sanderson continued. "We are well positioned to continue our growth strategy as we prepare to begin production at our newest complex in St. Pauls in January. The pounds produced at St. Pauls, at full production, will represent a 12% increase in our capacity."
"As of October 31, 2016, our balance sheet reflected $1.423 billion in assets, stockholders' equity of $1.190 billion and net working capital of $465.1 million. We had no debt at year-end. Our balance sheet provides us with the financial strength not only to support our growth strategy, but also to consistently manage our operations through cycles that characterize our industry. We deeply appreciate the hard work and dedication to excellence of our employees, growers and everyone associated with our Company," Sanderson concluded.