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Sanderson Farms Q3 results for fiscal 2009

Sanderson Farms has reported results for the third fiscal quarter and nine months ended July 31, 2009.

Net sales for the third quarter of fiscal 2009 were $504.8 mln compared with $466.9 mln for the same period a year ago. For the quarter, the company reported net income of $43.0 mln compared with a net loss of $3.6 mln for the third quarter of fiscal 2008. The net results for the third quarter of fiscal 2008 included a charge of $1.7 mln paid for the settlement of the company's donning and doffing litigation.

Net sales for the first 9 months of fiscal 2009 were $1,320.5 mln compared with $1,263.4 mln for the first 9 months of fiscal 2008. Net income for the first 9 months of fiscal 2009 totalled $62.5 mln compared with $8.8 mln for the first 9 months of last year.

"Our results for the third quarter of fiscal 2009 reflect much improved market conditions for our company and our industry when compared to last year," said Joe F. Sanderson, Jr., chairman and CEO of Sanderson Farms. "The combination of lower costs and improved market conditions resulted in much higher margins for the quarter, and we are pleased with our performance. While retail demand for chicken remained relatively stable during the quarter, casual dining and food service demand continues to be negatively affected by weak economic conditions. Market prices for both corn and soybean meal were lower than last year's third quarter, and we will continue to benefit from lower feed grain costs during our fourth fiscal quarter compared to last year."

According to Sanderson, overall market prices for poultry products were higher in the third quarter of fiscal 2009 compared with prices a year ago. As measured by a simple average of the Georgia dock price for whole chickens, prices were higher by approx. 2.3% in the company's third fiscal quarter compared with the same period in 2008, and were higher by 6.9% for the first 9 months of the fiscal year compared with the year-earlier period.

Boneless breast meat prices during the quarter averaged 3.4% higher than the prior-year period, but averaged 3.3% lower for the first 9 months of the year compared with the prior year.

Jumbo wing prices averaged $1.29 per pound through the first 9 months of the fiscal year, up 35.2% from the average of $0.95 per pound for the first 9 months of fiscal 2008.

The average market price for bulk leg quarters decreased approx. 4.9% for the quarter and 15.1% for the 9-month period in fiscal 2009 compared with the same periods last year.

Cash market prices for corn and soybean meal delivered to the company decreased 26.7% and 1.2%, respectively, compared with the third quarter a year ago, and decreased 17.2% and 2.7%, respectively, for the 9 months ended July 31, 2009.

"In addition to improved market conditions, our operations continued to perform well during the third quarter," added Sanderson. "Our Waco, Texas, facility has moved to full production and continues to operate well. We are also pleased to report that construction is underway at the hatchery and feed mill sites for our new Kinston, North Carolina, complex, and we will break ground at the processing site in September. Our strong balance sheet has put us in a position to continue our consistent growth strategy to add value for our shareholders, and we look forward to the opportunities this and future growth will provide the Company, its shareholders, its employees and its customers."

Natalie Berkhout

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