Sanderson Farms, Inc. (production Division)

  • Overview

Sanderson Farms has steadily scratched its way up the poultry processors' pecking order. The fourth largest in the US, it produces, processes, sells, and distributes fresh, chill-pack, and frozen chicken (whole and cut-up) under the Sanderson Farms label. In addition to buying chicks from some 190 breeders, the company contracts with 800-plus independent chicken farmers, who raise the breeder flocks for Sanderson. Its prepared-foods business processes, sells, and distributes partially cooked or marinated chicken, including frozen entrĂ©es. Customers are food retailers, distributors, and restaurants and foodservice operators located mainly in the southeastern, southwestern, northeastern, and western US.

Geographic Reach

Based in Mississippi, Sanderson Farms produces, processes, sells, and distributes chickens nationwide, as well as in Eastern Europe, Russia, China, Mexico, and the Caribbean. It generates 89% of its gross sales in the US with the remaining 11% coming from exports.

Operations

The company, founded in 1947, operates its business through two wholly-owned subsidiaries: Sanderson Farms, Inc. (Production Division) and Sanderson Farms, Inc. (Processing Division). Its production unit, which produces chickens to the broiler stage, operates in Mississippi, Texas, and North Carolina. The processing unit, which focuses on processing, selling, and distributing chickens, boasts facilities in Mississippi, Louisiana, Texas, Georgia, and North Carolina, which combined process more than 9.37 million chickens per week.

Sanderson Farms has been expanding in North Carolina in recent years with a new poultry operation in Kinston, North Carolina, which processes an estimated 1.25 million birds per week for the retail chill-pack market, and a new big bird deboning processing facility and hatchery, equipped for 8.9 million pounds of dressed chicken per week.

Altogether, during fiscal 2013 Sanderson Farms processed 452 million chickens to produce 3 billion dressed pounds. Its prepared chicken product line consists of about 95 institutional and consumer packaged partially cooked or marinated chicken items that are sold nationally and regionally primarily to distributors and foodservice operators. 

Most of Sanderson's sales are generated in the US; its major foreign markets include Russia (the largest export market for US chickens), Eastern Europe, China, Mexico, and the Caribbean. Sanderson looks for foreign sales to buoy dark meat prices as consumers shift from red meats to chicken.

Sales and Marketing

Sanderson Farms markets its chicken products to national and regional supermarket chains, local grocers, and distributors located primarily in the Southeastern, Southwestern, Northeastern, and Western US. The company sells and distributes its products through sales personnel located at its corporate offices in Mississippi and through service representatives at each of its processing complexes and via independent food brokers.

To keep its brand in front of customers, Sanderson Farms spent $3.34 million, $1.27 million, and $875,000 on advertising in fiscal 2013, 2012, and 2011.

Financial Performance

Sanderson Farms has been pumping out poultry products, logging net sales increases year-over-year during the past five years and in 2013 posting its highest sales.

Net sales for Sanderson Farms rose 12% in fiscal 2013 as compared to 2012. The company attributes the increase to rising net sales of poultry products, thanks to a 10% increase in the average sales price of poultry products sold and a 3% increase in the pounds of poultry products sold from higher bird weights. The new Kinston complex, which reached full capacity in 2012, aided in this effort, as the company returned to full production at all facilities during fiscal 2013.

Net income also saw a 142% boost during the same reporting period, due to the net sales jump offset in part by the increase in the cost of sales attributable to the rise in both the pounds of poultry sold and the feed in broilers processed.

Operating cash flow mirrored the net income trend, increasing in fiscal 2013 by $47 million vs. 2012 due to improved market prices for poultry products during the reporting period and a $27.2 million drop in live chicken, feed, and egg inventories.

Strategy

The poultry processor's growth is tied to its control over production capacity coupled with close oversight of all operations related to the manufacture of its chicken products.

While many chicken processors serve the small bird markets (comprising primarily fast-food purveyors), Sanderson Farms targets the retail and big bird deboning markets, which service the grocery and foodservice sectors. Therefore, the average weight of Sanderson's birds is more than that of other companies' and its total production in pounds is greater, as well.  

The company's sales in 2013 marked a new high, increasing some 12% from the prior year. The improvement was attributable to higher prices for its offerings along with an uptick in pounds sold (supported by steady grocery sales).

To keep up with demand, Sanderson Farms in 2013 began building a new feed mill, hatchery, poultry processing plant, and waste water facility on separate sites across three Texas counties.

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Sanderson Farms, Inc. (production Division)


127 Flynt Rd
Laurel, MS 39443-9062
Phone: 1 (601) 425-2552
www.sandersonfarms.com

STATS


  • Employer Type: Unknown
  • Tres: D Cockrell
  • Credit Manager: Bobby Hill
  • Sec: Tim Rigney

Major Office Locations

  • Laurel, MS
  • Laurel, MS

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