Dive Brief:
- Sanderson Farms reported earnings of $66.9 million, or $2.94 per share, for the second quarter of fiscal 2017. This is up from $47.6 million, or $2.11 per share, in the second quarter last year, according to a company release.
- Revenue for Q2 increased to $802 million from $692.1 million in the year-ago period, outperforming analysts' expectations.
- “The results for our second quarter of fiscal 2017 reflect benign feed costs, continued favorable demand for poultry products from retail grocery store customers, higher volume, and an improving export environment," Chairman and CEO of Sanderson Farms said Joe F. Sanderson Jr., said in the earnings report.
Dive Insight:
Sanderson Farms continues to see healthy sales, suggesting that the controversy over its role in the Georgia Dock scandal is officially behind it.
Sanderson said that the company raised its sales price per pound during the first half of the fiscal year as market prices improved in Q2. Market prices for boneless chicken breast in particular improved in the past few months — 9.1% higher than a year ago. The average market price for bulk leg quarters jumped 17.2%, and jumbo wing prices rose 5.1%. The company also attributes the quarter's sales growth to an uptick in demand for chicken wings.
As far as future production goes, the chicken processor expects output in Q3 and Q4 2017 to rise 13.6% and 11.7%, respectively, as a result of new production at the company's St. Pauls, NC and Palestine, TX complexes.
The company's sales also suggest that despite industry assumptions, consumers have not been dissuaded by Sanderson Farms' use of antibiotics. The meat giant recently affirmed this commitment, even as companies like Tyson, Perdue Farms and Butterball pledge to source their products from animals raised with "no antibiotics ever."
"When they (European countries) took antibiotics out of use in their flocks … their birds came to the plant with more salmonella, more E. coli, more campylobacter and more listeria,” Sanderson told Meat + Poultry. “And that's something we've been working to reduce for 25 years. We want less salmonella.”
It will be interesting to see if consumer attitudes toward Sanderson Farms change as people become more aware of the company's antibiotic use. Shoppers could be drawn to the "antibiotic-free" label claims that competitors can now use on product packaging, which could hurt future sales.