August 12, 2014
Smithfield Foods sees 14% increase in Q2 sales
US-based pork producer Smithfield Foods Inc., now a wholly-owned independent subsidiary of China-based WH Group Limited, saw its second quarter sales ending June 30 rise 14% on-year to US$3.8 billion.
Hog production operating margins for the company was at an all-time 15%, or US$37 per head. Live hog market prices surged 30% on-year, or US$88 per hundredweight - a sign of tight supplies because of the porcine epidemic diarrhoea virus' impact on hog production.
Despite the surge in profit, C. Larry Pope, Smithfield president and CEO, warned the effects of PEDv, could impact the firm's overall market growth and future product pricing. Because of the virus' impact on hog production, company officials processed 8% fewer hogs, with heavier weight hogs compensating for a significant portion of the volume decline.
The virus, which caused an overall spike in pork prices and has killed millions of hogs worldwide, infects the cells that line the small intestine of the pig. While older hogs mostly get sick and lose weight, infected new-born piglets usually die within a week of contracting the virus.
Pope said, "Fundamentals were very supportive, particularly in our hog production segment, with tight supplies due to PEDv and strong demand both domestically and internationally, which pushed hog production margins to record levels."
Pope said the firm will remain focused on maximising its existing businesses through increased consumer marketing programmes. He added Smithfield officials also expect to see "enormous growth potential" for its US business through its packaged meat sector, which includes Smithfield, Eckrich and Cook's brands.