November 21, 2003

 

 

US Smithfield 2nd Quarter Earnings Soar Due To Improved Beef & Pork Prices

 

Smithfield Foods Inc., US' largest hog producer and pork processor, said Thursday its second-quarter earnings soared as beef and pork prices improved.

 

The company said earnings for the quarter ended October 26 climbed to $36.2 million, or 33 cents a share, from $4.1 million, or 4 cents a share, in the year-earlier period.

 

Net income from continuing operations excluding the results of Smithfield's Schneider Corp. unit recorded $31.9 million, or 29 cents per share. That compares to a small loss of $200,000, or break-even per share, a year earlier.

 

Analysts surveyed by Thomson First Call had a consensus estimate for earnings of 32 cents a share.

 

Sales in the quarter rose 16% to $2.06 billion from $1.77 billion.

 

Chief executive Joseph W. Luter III said he was generally pleased with the quarter's results. "Our pork and beef operations are healthy, and our processed meats business is growing faster than the industry," he said.

 

Sales from continuing operations rose on higher beef and pork prices, reflecting higher raw-material costs in pork and strong demand for beef. Operating profit in hog production improved because of higher live hog prices.

 

Operating profit in the beef segment doubled as a result of continued demand for beef in spite of sky-high cattle prices. Prices for live cattle soared to record levels after a ban on Canadian cattle.

 

Smithfield also posted double-digit volume increases in pre-cooked bacon, sausage, entrees and ribs. In the traditional processed meats category, hot dogs and dry sausage also grew at double-digit rates.

 

For the first half of the fiscal year, Smithfield Foods reported net income of $58.3 million, or 52 cents per share, up dramatically from $15.9 million, or 14 cents a share, in the same period one year ago.

 

Sales in the first six months of the fiscal year rose 13 percent to $4.04 billion from $3.58 billion.

 

On September 25, Smithfield announced plans to sell Canadian food processor Schneider to Toronto-based Maple Leaf Foods Inc. for $378 million. The sale is expected to close before the end of Smithfield's fiscal year.

 

The company recently announced the purchase of ham producer Cumberland Gap. And on October 28, it acquired Kansas City, Mo.-based Farmland Foods from Farmland Industries for $367.4 million.

 

Shares in Smithfield fell 47 cents to close at $24.00 on the New York Stock Exchange.