Cal-Maine to expand, after cold winter lifts sales

Cal-Maine Foods highlighted plans for expansion both through acquisitions and growing its existing facilities as the egg producer unveiled better-than-expected results â€" helped in part by the cold US winter.

The world's biggest table egg producer said its board had backed expansion projects for facilities in Florida, Kentucky and Texas.

And it signalled that its purchase earlier this month of the outstanding 50% of Delta Egg Farm, with capacity for 1.6m laying hens, would not be the last acquisition.

The deal "further advances our strategy to expand our capacity and grow our business through selective acquisitions", said Dolph Baker, the Cal-Maine chairman and chief executive, adding that the group was looking forward to "additional market opportunities ahead" in 2014.

Spot market purchases

The group said that it intended to reduce its raise the proportion of own-produced eggs in sales.

Of the 268.9m eggs Cal-Maine sold in the three months to March 1, equivalent to more than 20m eggs a week, some 30% were bought in.

"Additional capacity will allow us to purchase fewer eggs in the spot egg market where prices may be more expensive," Mr Baker said.

The group is also attempting to boost profits by selling more specialty eggs, which accounted for 17.4% of sales, by volume, in the quarter, up from 16.7% a year before.

‘Below-average temperatures'

The comments came as the group unveiled earnings of $42.6m for the quarter, up 39% year on year and equivalent to $1.77 per share.

Wall Street had expected a $1.41-a-share result.

The result reflected in part a 9.6% rise to $395.5m in sales, reflecting "both improved volumes through the holiday season and higher average selling prices", Mr Baker said.

"Consumer demand for shell eggs has been strong at the retail level for both generic and specialty eggs, supported by below-average temperatures across the country," with the unusually cold US winter encouraging egg consumption.

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