Meat&Poultry - June 2012 - 45

Maintaining optimism
BY KIMBERLIE CLYMA
kclyma@sosland.com

conomic conditions in 2012 might be improved compared

man and CEO.

process 9.375 million birds per week. The company reports that all of its plants – five big-bird deboning facilities and four retail tray pack plants – are currently running at 96 percent capacity. “The increased production at the Kinston plant during fiscal 2012 will more than offset the four percent production cut we announced in August 2011 at all of our plants,” Sanderson said. The company instituted that production cut in January in order to balance production with current and expected demand. “Because we expect demand from our food-service customers to remain soft until consumers regain their confidence and

Growth opportunities
Sanderson Farms recently moved up to the ranking of the No. 3 largest poultry producer in the US, by processed pounds (by poultry head count, the company is still No. 4). However, Sanderson told attendees of the BMO Capital Markets Farmto-Market Conference in New York on May 16, “That’s not really important to us.” What is important is that Sanderson Farms announced record annual sales of $1.978 billion in 2011, surpassing its previous record of $1.925 billion the year prior. Dressed poultry sales increased from 2.570 billion lbs. to 2.794 billion lbs. in 2011, another record for the company. “These results ref lect the solid execution of our growth strategy to steadily increase our production capacity and expand our customer base,” Sanderson reported in the company’s annual report. The company’s production for 2012 is expected to be up 2 percent from 2011. “And in 2013, if we have a decent crop year, we are expecting about a 5 percent gain,” Sanderson said. Sanderson Farm’s Kinston, NC, plant, which started production in January 2011, hit 96 percent capacity in April. The plant processes 9 million birds per week and has the capacity to

to last year, but the poultry industry isn’t in the clear yet. Volatility in the grain and feed markets continues and consumers are still showing some apprehension when it comes to retail and foodservice purchases. Paul Aho, a consulting economist in Storrs, Conn., who tracks the chicken industry closely, told Meat&Poultry this past January, “There’s only one direction it can go. Either the entire industry goes bankrupt or it gets better.” Aho predicted the industry could be profitable by spring, but others, including executives from Laurel, Miss.based Sanderson Farms remained cautiously optimistic. “We fully expect demand to remain depressed during 2012 as a result of macroeconomic factors and don’t expect demand to improve materially until unemployment improves and consumers regain their confidence,” says Mike Cockrell, CFO. Sanderson Farms intends to face this year’s challenges head on, and Cockrell and his counterparts hope this strategy will result in a profitable 2012. “Over the past year, we have relied on our operational efficiencies, our commitment to our customers and our strong balance sheet to manage through challenging conditions and to continue our growth strategy,” said Joe F. Sanderson Jr., Sanderson chair-

“Over the past year, we have relied on our operational efficiencies, our commitment to our customers and our strong balance sheet.”
the employment outlook brightens, we currently plan to leave our production cut in place through fiscal 2012.” If all goes well in 2012, Sanderson Farms will move on its project to build another big-bird deboning plant in North Carolina, hopefully in 2013.

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Meat&Poultry - June 2012

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