Sanderson May Build North Carolina Plant for $110 Million

Sanderson Farms Inc. may build a second plant in North Carolina that could cost as much as $110 million as the fourth-largest U.S. chicken processor seeks a closer delivery point for customers in the Northeast.

“The balance sheet has plenty of room to build this plant,” Joe Sanderson Jr., chairman and chief executive officer of the Laurel, Mississippi-based company, said in a phone interview today. The plant would serve some customers in the Northeast currently supplied from Mississippi, he said.

Cash and cash equivalents for the company have more than doubled to $139.3 million as of July 31 from a year earlier, according to data compiled by Bloomberg, as corn costs have dropped and chicken prices have risen. The company today reported earnings for the fiscal third quarter that fell short of analysts’ estimates on disappointing birth rates and bird weights.

The company withdrew a plan to build a plant in Nash County, North Carolina, in 2012 after a neighboring county complained. No location has been identified for a new facility and Sanderson declined to give a timeframe for it.

The chicken processor is currently building a facility in Palestine, Texas, that includes a hatchery, feed mill, wastewater treatment and processing plant for $140 million. It will begin processing chickens there in the first quarter of next year, Sanderson said in a statement today.

A second plant in North Carolina may be $35 million cheaper than the new Texas facility because the company doesn’t need to build a feed mill. It currently has one plant in North Carolina and a feed mill with the capacity to serve two, the CEO said.

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