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Sanderson’s Q4 Results Beat Street’s Estimates (SAFM)

Shares of America’s largest chicken producer, Sanderson Farms Inc. (NASDAQ: SAFM) edged up on Tuesday after the company reported better-than-expected fiscal fourth quarter earnings thanks to a double digit revenue growth and better prices fetched offsetting partially higher feed grain costs during the quarter.

For the fourth quarter, the Laurel, Mississippi based company reported net income of $9.35 million or 41 cents a share, against a net loss of $21.56 million or 97 cents a share, in the year earlier quarter. The Company had included a charge of $9 million or 27 cents a share, linked to inventory cost adjustment, in the year earlier quarter.

Net sales during the period climbed 15.8 percent to $ 648.38 million.

Analysts polled by Thomson Reuters, had a consensus estimate of 32 cents a share on revenue of $635.75 million.

The company said that overall prices for whole chicken increased by 7.7 percent, for jumbo wings prices soared 81 percent while boneless breast meat prices were 12 percent higher in the fourth quarter which partially helped offsetting higher chicken-feed costs.

While corn prices climbed by 11.6 percent, soybean prices leaped by 39.7 percent in the fourth quarter.

Operating margins stood at 2.4 percent, compared to negative 5.3 percent in the year earlier quarter.

Commenting over the backdrop in which company posted unexpectedly higher earnings, Sanderson’s Chairman and Chief Executive Joe Sanderson Jr. said, “The fourth quarter of fiscal 2012 marked the end of another challenging year for Sanderson Farms and the poultry industry.”

For the fiscal 2012, Sanderson reported net income of $53.94 million or $2.35 a share, against a net loss of $127.08 million or $5.74 a share, in the fiscal 2011. Annual sales improved by 20.6 percent to $ 2.39 billion from last fiscal.

Analysts’ consensus estimate was for earnings of $2.22 a share on revenue of $2.37 billion.

“We are pleased that our profitability during fiscal 2012 allowed us to significantly reduce outstanding debt and strengthen our balance sheet,” added the Chief Executive.


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