020833 Sanderson Farms Reports 3rd Quarter Results

Laurel, MS (BUSINESS WIRE) - Sanderson Farms, Inc. reported results for the third fiscal quarter and nine months ended July 31, 2002.

Net sales for the third quarter of fiscal 2002 were $202.7 million, up 10.3% compared with net sales of $183.7 million for the same period a year ago. For the quarter, the Company reported net income of $9.3 million, or $0.70 per diluted share, compared with net income of $9.6 million, or $0.70 per diluted share, for the third quarter of fiscal 2001.

For the first nine months of fiscal 2002, net sales were $542.6 million, an 8.7% increase compared with net sales of $499.4 million for the same period last year. The Company reported net income of $22.3 million, or $1.66 per diluted share, for the first nine months ended July 31, 2002, compared with net income of $15.0 million, or $1.10 per diluted share, for the same period of fiscal 2001.

"We are pleased with our sales and operating execution during the third fiscal quarter," said Joe F. Sanderson, Jr., president and chief executive officer of Sanderson Farms, Inc. "In spite of the uncertainties in the market and inconsistent prices for poultry products, we continued to see positive trends in our financial and operating performance for the first nine months of fiscal 2002 compared with the year-earlier period. We believe these results reflect our ability to fully leverage our assets, and achieve higher levels of sales from our improved product mix."

According to Sanderson, trends in market prices for poultry products during the quarter continued to be mixed. As measured by a simple average of the Georgia dock price for whole chickens, prices increased approximately 1.6% in the Company's third fiscal quarter compared with the same period in 2001. Boneless breast meat prices during the quarter also increased, averaging $1.45 per pound, or 8.8% higher than the same period a year ago. However, the most dramatic shift in market prices occurred for leg quarters and wings. Bulk leg quarters decreased during the quarter due primarily to the Russian embargo of U.S. poultry meat and the resulting increase of product in the domestic market. Market prices for bulk leg quarters during the third quarter of fiscal 2002 averaged 37.6% below the same period last year. Wing prices averaged 49.5 cents per pound, down 48% from the average of 95.2 cents during the third quarter of fiscal 2001, and down 26.7% for the year.

"The Russian embargo on United States poultry products continued to have a significant impact on our export business during the third quarter of fiscal 2002," said Sanderson. "While it is difficult to quantify exactly what the embargo cost the Company for this quarter, the interruption in access to an important market for poultry shipments has adversely affected the entire industry, creating continued pricing pressures. While shipments to Russia have resumed on a limited basis, it will be difficult to determine when volumes will return to historical levels until a new protocol governing future shipments is defined."

The Company also stated that, based on fiscal year-to-date trends and internal projections, it remains comfortable with an annual earnings estimate of $2.00 to $2.20 per share for the fiscal year 2002.

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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