000603 Sanderson Farms Reports 2nd Quarter Results

Laurel, MS - Sanderson Farms, Inc. reported results for the second quarter and first six months of fiscal 2000. For the three months ended April 30, 2000, the Company reported net sales of $139,781,000, up 3.9% compared with net sales of $134,586,000 for the second quarter of fiscal 1999. The Company reported a net loss of $4,497,000, or ($0.33) per basic and diluted share, compared with net income of $2,438,000, or $0.17 per basic and diluted share, for the same period a year ago.

For the six months ended April 30, 2000, the Company reported net sales of $276,789,000, up 6.1% from net sales of $260,815,000 for the first half of fiscal 1999. The Company reported a net loss of $5,912,000, or ($0.43) per basic and diluted share, for the first half of fiscal 2000 compared with net income of $5,882,000, or $0.41 per basic and diluted share, for the same period of fiscal 1999.

The results for the quarter and the six months ended April 30, 2000, were adversely impacted by a $1.2 million charge for the Ameriserve reorganization filing on February 1, 2000. Excluding that charge, the loss for the quarter and the six months was $3.7 million and $5.1 million respectively, or ($0.27) and ($0.37) per basic and diluted share.

Joe F. Sanderson, Jr., president and chief executive officer, commented, “The increase in the Company's sales in the second quarter reflect an increase in the total pounds of both poultry and prepared foods products sold. The increase in pounds of poultry products sold resulted in part from higher bird weights processed to accommodate our shift in market focus from fast food to retail chill pack, and in part from the completion of the double shifting of our Brazos County, Texas, processing plant. This increase in the volume of products sold, however, was offset by lower prices for our poultry products as our industry continues to be adversely affected by an over supply of chicken and other meats. As a result of this over supply of meat, the average net sales price of poultry products sold during our second fiscal quarter ended April 30, 2000, decreased 3.7% compared with the same period a year ago.”

According to Sanderson, a simple average of the Georgia dock whole bird prices for the second quarter of fiscal 2000 reflected a decrease of 3.5% compared with the second quarter last year. For the first six months of fiscal 2000 whole bird prices decreased 7.1% as compared with the same period last year. In addition to this decrease in the Georgia dock price for whole birds, boneless breast meat prices have fallen as well, which has had a significant impact on the Company's margins. Boneless breast meat prices during the second fiscal quarter averaged 19.3% lower than the second quarter of fiscal 1999, and averaged 13.5% lower during the first half of the year compared to a year ago.

“The current weakness in the poultry market began last summer, and we believe it will continue at least through the third quarter of fiscal 2000. These cycles in our industry are historical, and the current softness in the poultry markets will abate when a balance is achieved between the supply and market demand for meat. In light of these market conditions, we continue to focus on our existing operations and maintenance of our balance sheet. We believe our plants are producing a product mix and serving markets that will favorably position Sanderson Farms when market conditions improve,” said Sanderson.

Finally, Mr. Sanderson noted that the Company continues its stock buyback program and has repurchased 123,100 shares at an average cost of $7.72 per share since the first quarter of fiscal 2000. Mr. Sanderson commented, “We continue to believe our stock at its current market price represents a very good value and will continue to repurchase shares within SEC guidelines as market conditions allow.”

Sanderson Farms, Inc. is engaged in the production, processing, marketing and distribution of fresh and frozen chicken and other prepared food items. Its shares trade on the Nasdaq Stock Market under the symbol SAFM.

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