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After sustaining net losses in 2008, the poultry processing company's margins began to show improvement during the second fiscal quarter of 2009. This improvement led Sanderson officials in July to move forward with its $121 million construction plans for a new Kinston processing site, which had been delayed for one year.
The Kinston processing plant will begin production during the first fiscal quarter of 2011. About 1,500 employees are expected to work at the new processing plant.
Sanderson's net sales for the third quarter of fiscal 2009 were $504 million, as compared to $466 million during the same period in 2008. The company reported a net income of $43 million in the third fiscal quarter this 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," Sanderson Farms Chief Executive Officer Joe Sanderson Jr. said. "The combination of lower costs and improved market conditions resulted in much higher margins for the quarter."
During the third fiscal quarter of 2008, the company reported a net loss of $3.6 million. Sanderson said during a recent conference call that he was optimistic about the future of the poultry business but the markets remain volatile.
Sanderson cut its poultry production levels to shave costs while the demand for its products plummeted in 2008.
Another contributing factor to Sanderson's net losses during late 2008 was the skyrocketing prices of corn and soybean feed used for animal feed. Since January, corn and soybean feed prices have dropped substantially and the demand for poultry has increased.
Sanderson said that consumers are still shying away from dining out in restaurants and the trend is likely to continue until the unemployment rates begin to creep back down. The demand for chicken may begin to rebound in 2010, he said.
"Fifteen million people are out of work," Sanderson said. "They will begin to eat out again when they get their jobs back and feel confident."
For now, construction work continues on the new Sanderson feed mill and hatchery in Kinston. Mark Pope, director of economic development for Lenoir County, said work would start in about three weeks to build the poultry processing plant.
"They are moving fast," Pope said. "Sanderson Farms has a lot to accomplish before the projected 2011 start date."
Sanderson said the company expects a 7 percent poultry production increase in 2010 for its business.
"We are focused on Kinston right now," Sanderson said. "We have a $120 million commitment."
Chris Lavender can be reached at (252) 559-1078 or clavender@freedomenc.com.
Sanderson Farms money watch
Third fiscal quarter of 2008
-- Net sales: $466 million
-- Net loss: $3.6 million
Third fiscal quarter of 2009
-- Net sales: $504 million
-- Net income: $43 million
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