Sanderson Farms Inc. reported lower results for the fiscal third quarter and nine months ended July 31, 2018, a result of counter-seasonal weakness in poultry prices and large supplies of competing proteins.

Net sales for the third quarter of fiscal 2018 were $852.4 million, compared with $931.9 million for the same period a year ago. Net income was $11.5 million, or 50 cents per share, compared with net income of $115.8 million, or $5.09 per share, for the third quarter of fiscal 2017.

Net sales for the first nine months of fiscal 2018 were $2.44 billion, compared with $2.42 million for the first nine months of fiscal 2017. Net income for the first nine months of fiscal 2018 totaled $104.6 million, or $4.58 per share, compared with net income of $206.9 million, or $9.10 per share, for the first nine months of last year.

“Sanderson Farms’ financial results for the third quarter of fiscal 2018 reflect significant counter-seasonal weakness in market prices for boneless breast meat produced for foodservice customers,” said Joe Sanderson Jr., chairman and chief executive officer of Sanderson Farms. “In fact, market prices for boneless breast meat, chicken breast tenders, boneless thigh meat, bulk leg quarters and jumbo wings produced at our plants that process a larger bird were all significantly lower this year when compared to last year’s third fiscal quarter.”

Sanderson said the company believes the counter-seasonal softness is due, at least in part, to a lack of chicken promotions at both foodservice and retail grocery stores and an ample supply of competing proteins.

“Market prices for poultry produced for retail grocery stores continue to reflect a more balanced supply-and-demand environment,” he said.

Feed costs per pound of chicken processed during the third fiscal quarter were up 5.8% compared to last year’s third quarter and were 7.7% higher sequentially.

According to Sanderson, compared with the fiscal third quarter of 2017, market prices for chickens sold to retail grocery store customers remained relatively flat at levels reflecting a good supply/demand balance. Compared with the third quarter of 2017, jumbo boneless breast meat prices were approximately 26.6% lower, the average market price for bulk leg quarters decreased approximately 12% and jumbo wing prices were 35.4% lower. The company’s average feed cost per pound of poultry products processed increased 1.5 cents/lb., or 5.8%, compared with the third quarter of 2017.

Prices paid for corn and soybean meal, the company’s primary feed ingredients, increased 4.3% and 15.5%, respectively, compared with the third quarter of 2017.

Sanderson noted that the U.S. Department of Agriculture "expects chicken production growth of 2.3% during calendar 2018, which alone shouldn’t be a burdensome supply number. However, chicken will continue to compete against an abundant domestic supply of protein, which may continue to pressure market prices. As always, we will manage our business consistently, regardless of market cycles.”

Sanderson touched on the progress of the company's Tyler, Texas, facility, saying construction is expected to be completed during the first quarter of calendar 2019. Sanderson Farms looks forward to the opportunities the new facilities will provide to its shareholders, customers and employees, he added.