August 17, 2009

US pork processor swings into profit in Q2

Lower feed costs helped Seaboard Corp.'s pork unit report a positive swing of some US$30 million dollars to post a second-quarter operating profit of US$4 million compared with a loss of US$26.4 million in the same quarter last year.

Sales, however, fell US$18 million in the quarter ended July 4 to US$270.2 million in the quarter from US$288.3 million last year on lower pork product prices.

For the six month period, the Shawnee Mission, Kansas-based company reported an operating loss of US$13.1, compared with a loss of US$31.2 million in the same period last year. Six month revenues rose to US$533 million from US$527 million.

The increase sales for the six-month period is due to higher volumes of pork products sold, primarily to export markets. However, the gains were partially offset by lower sale prices.

Seaboard said increased volumes resulted from expanded daily capacity at its Guymon, Oklahoma, processing plant, while lower sales prices largely resulted from the impacts of the H1N1 outbreak.

The company notes that lingering impact from the flu could continue to hinder sales performance. "As a result, management is unable to predict whether this segment will be profitable during the second half of 2009."

Included in Seaboard's budget for the remainder of 2009 is US$8.7 million for upgrades to the Guymon pork plant, improvements to existing hog facilities and additional facility upgrades and related equipment.

In the first half of the year, Seaboard spent US$9.7 million in the pork segment, primarily for its new ham-boning and processing plant in Reynosa, Mexico; upgrades to the Guymon plant and upgrades to hog facilities.