Smithfield income drops on charge

by Staff
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SMITHFIELD, VA. — A large early debt extinguishment charge contributed to a 91% decline in income during the second quarter for Smithfield Foods, Inc.

For the quarter ended Oct. 28, the company had income of $10.9 million, equal to 7c per share on the common stock, which compared with income of $120.7 million, or 74c per share, during the same quarter of the previous year. Sales for the quarter were $3,225.8 million, down 3% from $3,312.6 million during the same quarter of the previous year.

“Our solid second-quarter performance reflects the results of our ongoing efforts to deliver higher quality and more consistent earnings to our shareholders led by growth in our packaged meats business, even when faced with challenging commodity markets,” said C. Larry Pope, president and chief executive officer. “In addition to higher packaged meats margins, volumes improved on a year-over-year basis for the third consecutive quarter, growing by 2%. Volume and sales grew across all key trade channels, more than offsetting double-digit declines in our industrial business. Strong retail channel performance, which accounted for more than half of packaged meats volume in the quarter, was led by growth in our Armour, Farmland, John Morrell and Kretschmar brands.

“New business with a number of national accounts continued to support growth and provide momentum in the food service channel. Gains in deli were fueled by our Eckrich brand with the introduction of Eckrich Bacon Lovers Deli Meats late last fiscal year, as well as our Kretschmar brand.”

The Pork segment had an operating profit of $194.3 million, up 13% from $171.2 million during the same quarter of the previous year. Sales for the segment were $2,720.9 million, down 2% from $2,774.8 million during the same quarter of the previous year.

The Hog Production segment recorded an operating loss of $32.6 million, which compared with an operating profit of $63.9 million during the same quarter of the previous year. Sales for the segment were $734 million, down 7% from $785.3 million.

For the six months ended Oct. 28, the company as a whole saw income decline 64% to $72.6 million, or 48c per share, which compared with income of $202.8 million, or $1.24 per share, during the same period of the previous year. Sales for the quarter were $6,317.1 million, down 1% from $6,406.8 million during the same period of the previous year.

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