August 24, 2007

 

Smithfield Foods' Q1 profit doubles to US$54 million
 

 

Smithfield Foods, the largest pork processor in the US, announced Thursday (Aug 23) a doubling of fiscal first quarter profits due to higher pork and beef sales.

 

The company's net income for the period ended July 29 rose to US$54.5 million, or 41 cents per share, from US$24.6 million, or 22 cents per share, in the same period last year.

 

The smaller-than-expected loss from discontinued operations also helped boost profits.

 

Earnings from continuing operations rose to US$62 million, or 47 cents per share, compared with US$39.9 million, or 36 cents per share, a year ago.

 

The current period's results included an US$800,000 loss from discontinued operations compared with a US$4.9 million loss last year.

 

Revenue for the quarter rose 21 percent to US$3.36 billion from US$2.77 billion in the previous year.

 

The buoyant news prompted shares to jump US$1.90, more than 6 percent, to US$31.99 at the open of trading Thursday.

 

Smithfield chief executive C. Larry Pope said he is generally satisfied with the company's performance in the first quarter given the challenges of higher grain costs and the continued adverse fresh pork environment.

 

Pork sales increased to US$2.23 billion from US$1.74 billion, while beef sales grew to US$754.7 million from US$623.7 million. Hog production revenue rose to US$605.6 million from US$458.4 million.

 

In the pork business, the volume of packaged meats grew 28 percent from the year-ago period, primarily because of Armour-Eckrich, which Smithfield Foods acquired last October.

 

Beef margins rose amid increased volumes and higher exports.

 

The international segment reported a profit, compared with a slight loss in the 2006 period, with strong performances from Groupe Smithfield and the company's Polish operations.

 

However, the company warned that second-quarter results would be affected by outbreaks of swine fever at two Romanian hog farms that have forced the company to write down inventory at an estimated pretax cost of US$4 million to US$5 million.

 

An outbreak also occurred at a third Romanian farm this week. Damages have yet to be determined.

 

Although the setback was disappointing, the company remained committed to its Romanian strategy, Pope said.