June 6, 2005

US food giant nets in high hog sales for fiscal year
 

US food giant, Smithfield Foods, totalled US$2.1 billion in hog sales for the fiscal year ended May 1, compared to US$1.4 billion the previous year, the company said Friday.

The company utilises a vertical integration strategy from raising hogs for its own production lines to selling packaged pork products. It also sells to other pork producers.

Demand for high-protein, low-carbohydrate foods kept hog prices high and at 29 percent higher than the year before. This, coupled with Smithfield's strategy, allowed the company to record overall sales of US$11.4 billion, up from US$9.3 billion the year before.

The company reported a record net income of US$296.2 million, or US$2.64 a share, up from US$227.1 million, or US$2.03 a share.

By contrast, Smithfield's beef sales dropped over the year to US$2.3 billion from US$2.4 billion. Smithfield plans to vertically integrate its beef operations, but it does not yet raise its own cattle and high cattle prices also do not help.

Q4 sales were high, but earnings decreased almost US$37 million from the Q4 a year ago. Q4 earnings were US$85.4 million, or US$0.76 a share, down from US$122.7 million, or US$1.09 a share in the earlier period of the year.