August 4, 2006

PSF reports 50 percent drop in profits this quarter

Sales at pork processor Premium Standard Farms fell nearly 16 percent the first quarter of fiscal 2007, from US$245.3 million a year ago to US$206.2 million presently.

Net profits were halved, dropping to US$7.6 million from US$15.4 million a year ago.

The company attributed the declines to a 9.6 percent drop in live hog prices and a 4.6 percent decrease in pork prices.

Lower volume in both the production and processing ends of its business also affected the bottom-line.

A considerably weakened export market during the quarter worsened the situation further. The year-ago quarter had experienced a 72 percent increase in exports, thus creating a stark contrast to this quarter, the company noted.

However, PSF expects the export market to improve through the rest of its fiscal year.

The entire protein industry had experienced challenging conditions the last few quarters, John Meyer, chief executive of PSF said.

In April and May, live hog and meat prices declined rapidly amid concerns of an oversupply situation. However, since these expectations have not materialised, prices have been increasing in both live hog and meat prices toward the end of June.