Broadway, VA - WLR Foods Inc. reported a net loss of $7.9 million, or $0.48 per share for the second quarter ended December 27, 1997. The Company reported a net loss of $5.4 million, or $0.30 per share for the same quarter last year. Net sales for the quarter decreased 4.9% to $251.4 million as compared to $264.4 million for the second quarter ended on December 28, 1996. Second quarter chicken revenues in comparison to the same quarter last year decreased 4%; a 6% increase in pounds sold was more than offset by a 10% decrease in prices. While turkey sales volume remained relatively constant year to year, prices this quarter declined approximately 3% when compared to the second quarter of fiscal year 1997.
Interest costs rose $1.9 million this quarter versus last year on increased borrowings and higher rates. In addition, fiscal 1997's second quarter included a nonrecurring $0.8 million in other income primarily as a result of a one time benefit from the settlement of a pricing dispute. These two factors combined to increase the reported net loss by approximately $1.7 million or $0.10 per share this year as compared to last year. In addition, the effects of fewer shares outstanding resulting from the acquisition of the shares held by Cuddy Farms, Inc. increased the loss per share in the most recent quarter by approximately four cents per share (excluding the impact of higher interest costs associated with the repurchase).
For the first half of fiscal year 1998, sales were down 6%, or $33.7 million to $502.9 million, compared to $536.6 million for the six months ended December 28, 1996. Gross profit increased $7.8 million or 2% of sales for the six month period ending December 27, 1997 when compared to the same period last year. The Company reported a net loss of $12.3 million, or $0.76 per share, compared to a net loss of $13.5 million or $0.75 per share for the same period in fiscal 1997.
President and Chief Executive Officer James L. Keeler stated: "In comparison to this quarter last year, weaker chicken and turkey markets reduced sales prices of our products by approximately $13.5 million which more than offset the benefit of lower grain pricing of almost $11 million. Domestic chicken pricing declined to more normal levels this year when compared to last year's unusually high prices. Although we would like to see better pricing in domestic and export markets, we continue to be comfortable with our prospects in chicken for both the near term and the long term.
"The outlook for turkey is much less positive. Although turkey performance improved this quarter versus last year, we will not wait to see if the industry will finally take the actions needed to bring supply and demand into better balance. Accordingly, earlier this week we announced the conversion of our Marshville complex from turkey to chicken production. This will help us to eliminate unprofitable commodity sales while improving per unit processing costs on our remaining production. We are also exploring other options designed to cut our debt level and to reduce our reliance on unprofitable commodity turkey sales while fulfilling the needs of our customers.
"Negotiations with lenders concerning our credit facilities are continuing. These facilities are expected to provide funding for planned capital expenditures and anticipated working capital needs."
WLR Foods is a fully integrated provider of high quality turkey and chicken products primarily under the Wampler Foods(R) label and retail ice under the Cassco(R) label. It is nationally ranked as the seventh largest poultry processor by sales volume and has processing operations in Virginia, North Carolina, West Virginia, and Pennsylvania, close to its major mid-Atlantic markets.
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