The country is still buzzing from the Pilgrim's Pride bankruptcy announcement, but that isn't the only news circulating in the chicken industry. Sanderson Farms, the fourth largest producer in the country posted a loss of $51.9 million, or $2.56 per share, for the fourth quarter.
While Sanderson stocks were expected to plummet, Joe Sanderson, Sanderson Farms CEO made a statement via conference call to investors assuring them that his top priority was protecting the company's balance sheet and not seeking to buy up assets. This announcement helped the company's shares rise $4.65, to $30.27 per share. You can listen to the conference call here at the Sanderson Farms website, or read a detailed stock analysis at Forbes.
What is Sanderson blaming the loss on besides feed costs? Football fans. Yes, really. Reuters has more on the story:
"Normally wing prices firm after Labor Day as football starts and fans begin moving into bars and water holes to eat Buffalo wings and watch their favorite teams. That did not happen this fall," Joe Sanderson, chief executive of No. 4 chicken producer Sanderson Farms Inc, said Thursday during a conference call with analysts.He points out that even while wing prices have dropped nearly 25% since last year, the recession is causing fans to stay home. Until demand increases or production decreases, wings will continue to be a money loser. In an attempt to jump start the latter, Sanderson announced that they would cut production by 10%.
The hard times in the chicken industry, while not as prominently displayed as the auto industry, are starting to have a pronounced effect on working Americans. The recession is causing people loose jobs and not be able to eat out or buy as much at the grocery store, and in turn major plants are cutting back or ceasing production altogether. Sanderson announced that they would not give out their annual bonuses for 2008, while a plant which did chicken de-boning for Tyson was forced to close after the poultry giant chose not to renew their contract. The town of Pittsburgh Texas is waiting to see what will become of Pilgrim's Pride- the company employs about 5,000 people at its headquarters. The Associated Press has more on the story:
"It would look like a ghost town," said Strawn, who says Pilgrim stops by the restaurant many weekends. "There ain't nothing else here that can keep Pittsburg up."Despite the continuous flood of bad news, people are still trying to remain positive and hope for a turnaround. Joe Sanderson said in his statement to shareholders that he expects the American people will again visit restaurants.
"People haven't quit eating out for the rest of their lives," he said.Further Reading:
ENC Today on tough times for chickens.
WXVT15 News on the Petit Jean Poulty Plant closing.
CNN Money on Sanderson stock prices.
