Dive Brief:
- Sanderson Farms' third fiscal quarter net sales dipped 1.6% to $728.0 million from $739.9 million last year.
- Quarterly net income rose to $54.7 million, or $2.42 per share, from $50.9 million, or $2.27 per share, reported during fiscal Q3 2015.
- Mixed pricing for chicken parts as a result of continued weak export demand impacted the quarter's financials.
Dive Insight:
Sanderson Farms and other chicken processors are still struggling with export demand, which was much higher before last year's bird flu outbreak. Because of that outbreak, several countries passed export bans on U.S. poultry and eggs, which cut into chicken processors' revenue and profitability.
Now that poultry farms are returning to normal operation and production, most of those countries have since lifted their bans. China a significant major market for many food and beverage companies, still has not.
In the meantime, Sanderson Farms has taken on challenges facing domestic meat producers, namely the debate over use of antibiotics for treating food animals. Earlier this month, the company launched an ad campaign to address common misconceptions about antibiotic use in poultry production. The campaign attempts to dispel myths about antibiotics and correct "marketing gimmicks designed to mislead consumers and sell products at a higher price," according to a news release.
If the costs and logistics of shifting away from antibiotics are too high or complex, Sanderson Farms could start a new trend among poultry processors that values transparency and consumer engagement over massive overhauls of its supply chain to meet certain consumer demands.