February 2, 2007

Premium Standard profit drops on charges, impact of hog disease

Premium Standard Farms Inc, a Kansas city hog producer and pork processor reported a drop in Q3 net income by 79 percent, hurt by lower volume due to hog diseases and charges related to its merger with Smithfield Foods.

Quarterly income fell to US$2.9 million, or 9 cents a share, from US$13.8 million, or 44 cents, a year earlier. Excluding costs related to its takeover by Smithfield Foods, Premium Standard made 18 cents a share.

In a deal announced in September, Smithfield Foods would buy Premium Standard for about US$674 million in cash and stock. Smithfield would also assume about US$117 million of Premium Standard's debt.

Revenue dropped 8 percent to US$224.3 million from US$242.9 million.

The company raised the number of vaccinations to treat the Porcine Circovirus, which has hurt its hogs in previous quarters, but does not see the benefits coming until the Q4.