Sanderson Farms resumes exports to Russia

Reuters

(Corrects 5th paragraph to show chicken export figure is for United States, not Sanderson Farms)

* Q3 EPS $1.55 vs Street view $1.87

* Net sales off 3 pct

* Hot weather cuts production

* Shares up 4.5 percent after Russia news

By Bob Burgdorfer

CHICAGO, Aug 23 (Reuters) - Sanderson Farms Inc <SAFM.O> said it has resumed chicken exports to Russia, one of the first U.S. companies to confirm shipping to that market since Russian authorities banned U.S. poultry in January.

Sanderson shares rose 4.5 percent as investors hoped the resumed shipments would boost revenue and chicken prices. The news took Wall Street's focus away from the company's weaker-than-expected quarterly results.

Russia banned imports of U.S. chickens in January because of a chlorine rinse disinfectant used in the United States. But it has lifted the prohibition on some plants that have switched to other disinfectants.

Sanderson Chief Executive Joe Sanderson called potential Russian demand "spectacular." He said shipments still trail pre-ban levels because not enough plants have been approved to resume sales to Russia.

In the first quarter of 2010, the United States shipped just under 34,000 metric tonnes of chicken to Russia, down nearly 80 percent from the same period a year earlier.

The Russian ban has hurt chicken prices. In Sanderson's third quarter, ended July 31, prices for leg quarters were down 22 percent.

The lower chicken prices and a heat wave that slowed chickens' growth hurt Sanderson's quarterly profit.

The Laurel, Mississippi-based company earned $36.1 million, or $1.55 a share, in the third quarter, down from $43.0 million, or $2.06 a share, a year earlier.

Revenue fell 3.1 percent to $489.1 million.

Analysts, on average, expected earnings of $1.87 a share on revenue of $518.6 million, according to Thomson Reuters I/B/E/S.

Sanderson saw slightly lower costs for corn and soybean meal in the quarter. But chicken production was 10 million pounds, or 1.6 percent, below company expectations amid unusually hot, humid weather. Temperatures frequently hit 100 degrees Fahrenheit in some areas.

"We lost some time during the quarter just because the birds were not big enough," Lampkin Butts, Sanderson's chief operating officer, said during a conference call.

Sanderson raises and processes chickens and sells the meat to grocery stores, restaurants and export markets. CEO Sanderson said demand at grocery stores remained strong, but restaurant demand was sluggish and would remain so until unemployment eases and consumers have more money to eat out.

Sanderson shares were up $1.92 to $45.08 in afternoon trade on the Nasdaq. The shares are down nearly 19 percent since mid-July and fell as low as $41.56 on Monday before the news on Russia.

Sanderson also said it expects its facility in Kinston, North Carolina, to begin processing poultry in January. (Reporting by Bob Burgdorfer; additional reporting by Phil Wahba in New York and Shradhha Sharma in Bangalore; Editing by Maureen Bavdek and John Wallace)

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