June 8, 2007

 

Smithfield Q4 net profit up sharply on pork operations

 

 

Smithfield Foods said Thursday (Jun 7) its fiscal fourth-quarter profit rose sharply, helped by a favourable comparison to year-earlier results that were battered by depressed pork margins and lower live-hog prices resulting from oversupply in the US.

The Smithfield, Virginia, processor of pork and pork products also named Carey J. Dubois vice president and chief financial officer, effective July 1. Dubois, 47 years old, replaces Robert W. Manly IV. Manly was interim chief financial officer and will remain executive vice president.

 

Smithfield's net income rose to US$37 million, or 33 cents a share, for the quarter ended April 29, up from US$1.1 million, or a penny a share, a year earlier. Results for the quarter include Quik-to-Fix Foods and Smithfield Bioenergy, which are discontinued operations. Analysts surveyed by Thomson Financial had forecast, on average, earnings of 36 cents a share.

 

Results included a pretax charge of 4 cents a share to impair the value of certain assets within the beef segment, offset by a 5-cent a share reduction in income tax from certain foreign tax benefits. The year-earlier fiscal fourth quarter included pretax charges of 5 cents a share from the restructuring of East Coast pork-processing operations.

 

Revenue in the latest quarter rose 14 percent to US$3.06 billion from US$2.68 billion a year earlier. Analysts were looking for US$3.16 billion in revenue.

 

On May 29, Smithfield said it expected to report fourth-quarter income from continuing operations of 30 cents a share to 35 cents a share. The company noted these results reflect increased raising costs in its hog production operations and losses in its cattle feeding business.

 

The company said Thursday it expects fiscal 2008 to be stronger than 2007.

 

Smithfield, the world's largest pork processor, has said that corn prices are likely to remain at about US$4 a bushel for some time and that the fresh meat business will remain challenging.

 

Pork sales climbed 19 percent to US$2.06 billion, and beef sales rose 15 percent to US$679.9 million. Operating profit from the pork business rose sharply to US$81.1 million from US$22.2 million a year earlier, boosted by pre-cooked bacon, lunch meats, and smoked and dry sausage.

 

Hog-production sales rose 5.9 percent to US$436.4 million, but operating profit fell 14 percent to US$40.6 million.

 

Smithfield's products include fresh pork and processed meats sold under the Fleetwood, John Morrell, Lykes, Patrick Cudahy and Smithfield Premium names. It also has beef and turkey operations.

 

Despite a lengthy downtrend in Smithfield's earnings, the company's US breadth has grown in recent months through a series of acquisitions. Last month, the company completed its purchase of Premium Standard Farms for US$800 million. Last autumn, Smithfield acquired ConAgra Foods's packaged meats business, including the Armour and Butterball brands, for US$571 million.