November 30, 2007

Smithfield profit hit by costs, low hog prices

Smithfield Foods Inc reported a lower quarterly profit on Thursday as lower hog prices, tax loss and swine diseases in Romania hurt results.

Virginia-based Smithfield reported earnings of US$17.4 million, or 13 cents per share, for the second quarter ended October 28, compared to US$44.7 million, or 40 cents, a year earlier.

The company said losses were mainly due to swine disease in Romania which incurred around US$13 million. At the same time, a tax loss due to foreign currency fluctuations totaled US$25 million. The two totaled 28 cents per share.

Revenue for the quarter was US$3.46 billion, compared with US$2.80 billion a year earlier.

Last August, Smithfield announced a deal to sell 60 million pounds of pork to China. Since then, no additional sales have been announced.

A larger US hog herd this year pressured hog prices throughout the country, while higher prices for corn increased production costs.

Smithfield sells its hogs to its own plants as well as to competing pork plants.

Hog prices averaged US$46 per hundredweight in the quarter versus US$50 a year earlier. Costs average at US$49 per hundredweight compared with US$41 a year earlier.