September 9, 2011

Smithfield Foods Inc.'s fiscal first-quarter earnings rose 7.6% on high prices and strong export demands.

The improved earnings over the past year of the largest pork producer in the US was also due to successful passing of higher feed costs to consumers. Strong exports, particularly to Asia, have also boosted demand.

President and Chief Executive C. Larry Pope said the company is aiming for 3% sales volume growth in its packaged meats business for the current fiscal year and expects fresh pork and hog production industry trends to continue. Smithfield also expects export demand will remain robust, though commodities costs will remain a challenge.

For the quarter ended July 31, Smithfield reported a profit of US$82.1 million, or 49 cents a share, up from US$76.3 million, or 46 cents a share, a year earlier. Excluding a litigation-related charge and other items, earnings were 69 cents.

Revenue increased 6.7% to US$3.09 billion.

Analysts polled by Thomson Reuters most recently forecast earnings of 67 cents on revenue of US$3.15 billion.

Gross margin rose to 13.2% from 12.7%.

At its pork business, its biggest contributor to the top line, sales were up 7.6% including 8.9% growth for fresh pork and 6.4% for packaged meats. Sales of the company's 12 core packaged-meat brands were up 9% by revenue and 3% by volume.

An improved sales of 16% on their hog production segment has been reported while international business saw 19% growth.