US Seaboard Corp 3Q earnings increase despite dip in sales

 

 

US Seaboard Corp. reported on Friday (Nov 6) that the company's third-quarter earnings increased despite a drop in sales.

 

Net earnings for the quarter ended October 3, 2009 were US$36.7 million compared to US$32.9 million in 2008. Sales for the quarter were US$854.6 million compared to US$1.13 billion in 2008. The company incurred operating losses of US$2.68 million, compared to US$31.71 million in operating earnings in 2008.

 

In July, the company and affiliated companies in its Commodity Trading and Milling segment resolved a dispute with a third party related to a 2005 transaction in which a portion of its trading operations was sold to a foreign company.

 

Seaboard Overseas Limited received US$16.8 million, net of expenses, in the third quarter of 2009. The company said there was no tax expense on this transaction.

 

Net sales for the pork segment decreased US$43 million in the third quarter. The company attributed the decrease to overall decreases in pork prices.

 

The company added that pork bans by some foreign countries due to the AH1N1 flu outbreaks also caused a decrease in overall market prices for Seaboard's pork products.

 

However, increased volumes were made possible by the expansion in daily capacity at the Guymon processing plant during the first quarter of 2008. Operating income for the pork segment decreased US$3.2 million.

 

Seaboard is unable to predict future market prices for pork products or the cost of feed and hogs purchased from third parties.

 

Although several foreign markets have lifted their bans on imports of US pork products, flu-related concerns are still present and the lingering impact from these market disruptions continue to have a negative impact on sales prices. As a result, the company said operating losses would continue for the remainder of 2009.

 

Seaboard reported that the company spent US$11 million of a total US$39.1 million invested in property, plant and equipment.

 

The pork segment expenditures were primarily for improvements to existing hog facilities, upgrades to the Guymon pork processing plant and the ham-boning and processing plant in Mexico. The ham-boning and processing plant was completed in the second quarter of 2009.

 

Seaboard said the company has budgeted capital expenditures totalling US$23.3 million for the remainder of 2009. The pork segment plans to spend US$2.9 million for improvements to existing hog facilities and upgrades to the Guymon pork processing plant.