WorldPoultry: US egg producer reports record year despite AI crisis

LAYERS
Cal-Maine Foods, the largest egg producer in the US has reported record egg sales in its annual figures despite the US egg industry struggling to contain avian influenza outbreaks.

In a financial statement the company reported net sales for the fourth quarter of fiscal 2015 as $403.0 million, compared with net sales of $371.6 million for the fourth quarter of fiscal 2014. For the fiscal year 2015, net sales were $1,576.1 million, compared with net sales of $1,440.9 million for the prior-year period.

Dolph Baker, chairman, president and chief executive officer of Cal-Maine Foods, stated, "Our financial and operating performance for the fourth quarter of fiscal 2015 marked a strong finish to another record year for Cal-Maine Foods. Sales for the fourth quarter were up 8.5% over the prior year, reflecting a 6.2% increase in total dozen shell eggs sold and 2.6% higher average selling prices compared with the fourth quarter of fiscal 2014.

Strong customer demand

"Throughout fiscal 2015, we have demonstrated consistent execution of our growth strategy with favourable results. Our sales for the year surpassed the previous year's record by 9.4%, supported by strong customer demand from three major market sectors - retail, egg products and exports. We sold 1,063 million dozen shell eggs in fiscal 2015, up 4.9% over the prior year and a new annual record for Cal-Maine Foods. We also reported the highest annual net income in the Company's history.

"Specialty egg sales were a key driver of our performance for the year as we continued to expand our market reach. For fiscal 2015, sales of specialty eggs accounted for 19.8% of our total number of shell eggs sold and 27.2% of our shell eggs revenue. With the growing consumer demand for specialty eggs, we have also pursued additional opportunities to further enhance our product mix and offer a wide variety of healthy choices.

Shell egg production complex

"In April, we announced a new production joint venture in Texas with Rose Acre Farms to build a state of the art shell egg production complex with capacity for approximately 1.8 million cage-free laying hens. Construction of the complex has commenced, and the initial flocks are now expected to be placed in November 2015. This joint venture, Red River Valley Egg Farm, LLC, provides a unique opportunity to capitalise on the growing demand for specialty eggs and better serve customers who are looking for a trusted supplier of cage-free eggs."

Significant impact of AI on poultry industry

Baker added, "The recent outbreaks of Avian Influenza (AI) in the upper Midwestern United States this spring have had a significant impact on our industry. Due to the outbreaks, it is estimated that the national flock has been reduced by over 40 million laying hens and pullets, or approximately 13%. As a result of the reduced supply, egg prices have moved significantly higher in recent months. While the warmer summer months seem to have reduced further transmission of AI, egg prices are expected to remain high until the national laying hen flock can be replenished.

"There have been no positive tests for AI at any of the Cal-Maine Foods locations. However, we have significantly increased our biosecurity measures at every location, and we continue to monitor the situation every day. We are also working closely with the egg industry associations and government health officials to identify ways to mitigate the risk of future outbreaks."

Uncertain market conditions

Baker concluded, "While AI has created uncertain market conditions for our industry, we remain focused on managing our operations as efficiently and safely as possible. We are pleased with our execution to date, and believe we have a proven strategy for continued success in the year ahead. We are well positioned to leverage the additional capacity from our recent joint ventures and other expansion projects underway in Florida, Kansas, Kentucky and Texas."
by ROSIE BURGIN Jul 24, 2015