C Citigroup Inc

Sanderson Farms Inc. said profit tumbled in its latest quarter, as the chicken company faced sharply lower market prices for its products.

Sanderson, based in Laurel, Miss., has about 7% of the overall U.S. poultry market, behind Tyson Foods Inc. and Pilgrim's Pride Corp., and is a supplier for customers including Sysco Corp., Kroger Co. and Arby's.

"Market prices for most products produced at our big bird-deboning plants were significantly lower" during the quarter, said Chief Executive Joe Sanderson. "Bulk leg quarter prices remain under pressure as a result of weak export demand," hampered by bird flu in the U.S., a strong dollar and lower oil revenue in countries with oil-based economies, he said.

The average price for bulk leg quarters nearly halved, as wing prices fell 30% and boneless breast meat prices declined by about a quarter from a year earlier.

Overall, Sanderson reported a profit of $50.9 million, or $2.27 a share, down from $76.1 million, or $3.30 a share, a year earlier. Revenue slipped 3.7% to $739.9 million.

Analysts anticipated $2.90 in per-share earnings and $750.9 million in sales, according to Thomson Reuters.

Though food-service traffic and demand in the U.S. improved, Mr. Sanderson said, it wasn't enough to keep pace with additional industry production combined with higher domestic supplies—the result of lower exports.

While Sanderson's pricing power diminished, its costs also fell. The company's average feed cost per pound of poultry products processed dropped 25% as prices paid for corn and soybean meal—its primary feed ingredients—declined 13% and 35%, respectively.

Still, the company's gross profit margin slumped to 17.2% from 21% in the year-ago quarter.

Shares in the company, down about 19% this year, were inactive premarket.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

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(END) Dow Jones Newswires

August 25, 2015 08:05 ET (12:05 GMT)

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