Question-and-Answer Session
Operator
(Operator instructions) Our first question comes from Reza Vahabzadeh – Lehman Brothers.
Reza Vahabzadeh – Lehman Brothers
Rick you went through a bunch of useful information, I’m not sure if I made it all, for the March quarter, the US chicken volumes were roughly flat?
Rick Cogdill
That’s correct.
Reza Vahabzadeh – Lehman Brothers
So would that translate into a net price increase realized of 2-3%?
Rick Cogdill
2.5%.
Reza Vahabzadeh – Lehman Brothers
Would it be fair to assume that industry margins in April were not much better than the March quarter and actually possibly weaker?
Clint Rivers
April would be a lot like the month of March for us. Breast meat prices this April compared to a year ago were about $0.40 below where they were a year ago and pretty flat to where they were this past March, so it would b similar.
Reza Vahabzadeh – Lehman Brothers
So to get to a breakeven margin on a per pound basis, would that imply that form the end of March you really need an $0.08 per pound increase just to get back to breakeven?
Rick Cogdill
Like I reported, our operating margin for the quarter was a little over $0.08 a pound loss, so that is the kind of numbers that we need overall.
Reza Vahabzadeh – Lehman Brothers
And so to get back to normalized margin, however that is described, we’re talking about a selling price increase of $0.11-$0.13?
Rick Cogdill
That sounds correct.
Reza Vahabzadeh – Lehman Brothers
And then cap ex, I know it’s very early, but cap ex for 09, is it going to be comparable to what you’re talking about in 08?
Rick Cogdill
It’s early, we really haven’t looked at anything for 09 yet.
Operator
Your next question comes from Eric Katzman – Deutsche Bank.
Eric Katzman – Deutsche Bank
Clint you went through some numbers quickly at the beginning on the technology and the potential changes going on with the industry in terms of ability to increase production significantly off of the existing base if that technology is put in. How does that jive with Rick your comments about seeing some kind of possible recovery to I guess normalized return in the fiscal third quarter of 09, with the understanding that the situation is brutally difficult to predict.
Rick Cogdill
That’s the earliest I see that we could get there and it’s highly dependent on capacity expansion being in line with demand growth and that’s the whole point of slide 5 is to show really the pent up industry demand that’s out there, not only from the cutbacks but there’s still 19% of the industry that’s using a lot slower line speeds than what’s approved today.
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