Better hog prices narrow Smithfield's Q4 loss

 

 

Smithfield Foods Inc reported a narrower fourth-quarter loss as better hog and pork prices partially offset losses on its hog hedging activities.

 

Excluding the hedging losses and restructuring costs, the company's hog unit, the nation's largest, was profitable, due in part to Smithfield and other producers reducing herds.

 

Smithfield chief executive officer C. Larry Pope said live production losses, particularly on the cash side, have abated, although our fourth-quarter Hog Production segment results do not yet reflect the full benefits of the recently improved live hog production environment.

 

Hogs turned profitable this year after losing money for about two years. The losses were due first to high feed costs and later to slowing pork sales because of the AH1N1 flu and the recession. Producers, including Smithfield, reacted by reducing herds.

 

Pope said the hog unit should be profitable going forward due to stable feed costs and good hog prices, noting that the company does not see significant herd expansion on the horizon, which should stabilise hog supplies at healthier price levels.

 

Overall fourth-quarter operating profit increased slightly in the company's meat segment, with fresh pork earning US$10.5 million, compared with a year-earlier loss of US$18.1 million. Earnings in packaged meats slipped to US$100.7 million from US$128.8 million, pressured by higher raw material costs

 

The Smithfield, Virginia-based company reported a net loss of US$4.6 million, or 3 cents a share, for the quarter, ended May 2, as compared to a year-earlier loss of US$81.2 million, or 57 cents a share.

 

Meanwhile, sales rose 2% to US$2.9 billion. The company warned in April that it would have losses on its hedge positions in hogs on the futures market.

 

Smithfield said it has offered US$200 million for its joint venture partner's 51% stake in Butterball LLC and the partner's related turkey production assets.