June 17, 2009

Smithfield Foods, the largest US pork producer, reported a quarterly loss Tuesday (June 16), dragged down by continued losses from raising hogs, though the company said the AH1N1 flu virus did not hurt its latest results.

The meat producer reported a fiscal fourth-quarter loss of US$78.8 million, or 55 cents a share. In the year-earlier period, the company earned US$2.4 million, or 2 cents a share.

According to industry analysts, sales dipped to US$2.85 billion from US$2.87 billion. Analysts had pegged Smithfield to post a loss of 59 cents a share on sales of US$3 billion.

Hog producers have been weighed down by an oversupply of pigs and the costs to raise them, sparking widespread losses and putting some producers out of business. Smithfield has liquidated 10 percent of its herd but not everyone else has followed.

The industry has been helped by lower feed-grain prices. Pork is the world's most consumed meat. In 2008, the US accounted for close to 35 percent of world pork exports.

In late April, US pork producers took another hit after the AH1N1 flu virus slowed US exports, but on May 13, Smithfield said that demand had picked up and prices had recovered.

Smithfield chief executive Larry Pope said domestic market conditions began to normalise as consumers received more accurate information about the AH1N1 virus, but the company unfortunately continues to experience restrictions in some international markets, specifically China, which is negatively impacting exports in the first quarter of fiscal 2010.

Smithfield said its pork unit, which sells packaged meats to food retailers, posted an operating profit of US$110.7 million. Operating profit at its international division came in at US$3.5 million, while its hog-production business reported an operating loss of US$170.8 million.

This year, it announced plans to close six plants and lower the number of independent operating companies to three from seven.