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About Sanderson Farms, Inc. (production Division)

Sanderson Farms roosts near the top of the poultry producing pecking order. It produces, processes, sells, and distributes fresh, chill-pack, and frozen chicken under the Sanderson Farms label. In addition to buying chicks from over 230 breeders, the company contracts with nearly 820 grow-out farms. Its prepared-foods business processes, sells, and distributes partially cooked or marinated chicken. Customers are food retailers, distributors, and restaurants and foodservice operators. The company processes more than 620 million chickens annually.

Operations

Sanderson Farms' primary focus is producing and processing chicken for consumption. It sells chill pack, ice pack, bulk pack, and frozen chicken. Its products are sold whole, cut-up, and boneless and almost always under the Sanderson Farms brand name. Sanderson Farms produces more than 4.6 billion dressed pounds each year. Its prepared chicken product line consists of about 130 institutional and consumer packaged partially cooked or marinated chicken items that are sold nationally and regionally primarily to distributors and foodservice operators.

Overall, the company generates about 40% of its revenue from vacuum-sealed chicken; around a third from chill-packed chicken; around 15% from ice-packed chicken; over 5% from prepared chicken and frozen chicken each; while the rest comes from other.

Geographic Reach

Based in Mississippi, Sanderson Farms distributes its chicken products across the US and throughout several international regions, primarily Mexico, Cuba, Central Asia, and the Middle East. The company's fresh and frozen chicken operations presently encompass about a dozen hatcheries, almost 10 feed mills and around a dozen processing plants, including the facilities at its new Tyler, Texas complex.

The company's primary processing and production facilities are located in about 20 cities across nearly half a dozen US states: Mississippi, Georgia, Louisiana, Texas, and North Carolina.

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 itsproducts through sales personnel located at its corporate offices in Mississippi, through service representatives at each of its processing complexes, and via independent food brokers.

Sanderson Farms' sales to its two largest customers represent over 10% each.

To bolster its brand presence, Sanderson Farms markets through its website, television, radio, social media, magazines, billboards, trucks, and newspaper advertising, and point of purchase materials. Advertising expenses totaled $11,071 million in 2019, and $32.6 million in 2018.

Financial Performance

Except in 2018, when demand for chicken and market prices fell, Sanderson Farms saw rising revenue every year for half a decade. Net income growth has been sporadic and, in 2019, it fell to its lowest level since 2012.

In 2019 revenue rose 6% to $3.4 billion. The increase in net sales of poultry products resulted from a 3.5% increase in the average sales price of poultry products sold and a 2.0% increase in the pounds of poultry products sold.

Net income for 2019 dropped 13% to $53.3 million compared to %61.4 million in 2018. Cost of sales increased 6% that year.

The company ended 2019 with $95.4 million in net cash, nearly $26 million less than it had at the end of 2018. Operating activities provided $206.8 million in cash while investing activities used $248.5 million and financing activities generated $16million..

 

Strategy

While many chicken processors serve the small bird markets (comprising primarily fast-food purveyors), Sanderson Farms concentrates its production in the medium-sized and larger-sized birds serving the retail grocery and food service industries, respectively.. Therefore, the average weight of Sanderson's birds is often more than that of its competitors and its total production in pounds is greater, as well. In fact, the big bird market has been the most profitable market for the company over most of the past decade.

To keep boosting its production capacity, which is key to growing sales, Sanderson Farms regularly adds to its collection of processing facilities. In 2017, for example, a new processing plant and waste water treatment facility (costing $139 million) went live in St. Pauls, North Carolina. Also in 2017, Sanderson announced the selection of new poultry processing sites in Texas (Lindale, Mineola, and Smith County).

Company Background

Sanderson Farms began in 1947 when Dewey Sanderson started a Mississippi farm supply business to sell seed, feed, fertilizer, and other supplies. His sons Dewey Jr. and Joe Frank Sanderson joined the company in 1951, when it became Sanderson Brothers. It began breeding poultry and was incorporated four years later as Sanderson Brothers Farms. The company became vertically integrated with its 1961 purchase of broiler processor Miss Goldy.

The company expanded over the following 25 years and went public in 1987.

Sanderson Farms, Inc. (production Division)

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

Firm Stats

Employer Type: Privately Owned
Feed Mill Manager: Robert Polson
Employees (This Location): 150
Employees (All Locations): 9,000

Major Office Locations

Laurel, MS

Other Locations

Collins, MS
Fernwood, MS
Hazlehurst, MS
Bryan, TX
Waco, TX