May 29 (Bloomberg) -- Sanderson Farms Inc., the third- largest U.S. poultry producer, posted higher-than-expected earnings and sales as consumers switched to chicken amid higher beef prices while feed costs dropped.
Net income doubled to $51 million, or $2.21 a share, in its fiscal second quarter through April from $24.4 million, or $1.06, a year earlier, beating the $1.70 average of eight analysts’ estimates compiled by Bloomberg. Revenue climbed 6.4 percent to $660.7 million, the Laurel, Mississippi-based company said in a statement today.
Sanderson said sales volumes rose, outweighing an overall decline in prices. The cost of corn, the company’s primary feed ingredient, fell 34 percent year-over-year.
“Demand for chicken remains strong from our retail grocery store customers, and it appears the relatively high prices of competing protein have shifted some consumer demand to chicken,” Joe F. Sanderson, chairman and chief executive officer of Sanderson Farms, said in the statement.
The CEO said demand for chicken products will continue to be strong into the summer months. He also said the reduced size of the breeder flock will constrain production over the short term despite improved industry returns.
Sanderson shares gained 2.7 percent to $90.01 at 7:53 a.m. before the start of regular trading in New York.