Smithfield returns to profitability in quarter
December 9, 2010
SMITHFIELD, VA. — Rising pork prices and strong results in the hog production segment helped boost results for Smithfield Foods, Inc. and return the company to profitability during the second quarter.
For the quarter ended Oct. 31, the company had income of $143.7 million, equal to 87c per share on the common stock, which compared with a loss of $26.4 million during the same quarter of the previous year. During the quarter the company had sales of $2,998.8 million, up 11% from $2,692.4 million.
“We are pleased to deliver another record quarter to our shareholders,” said Larry Pope, president and chief executive officer. “Record earnings were driven by disciplined management in packaged meats and fresh pork accompanied by improved fundamentals in hog production.
“Supply and demand remained well in balance in the quarter. Reduced protein supplies coupled with strong protein demand supported record high pork prices in all trade channels. Export demand for pork continued to be enhanced by a weak U.S. dollar as the U.S. remained one of the lowest cost global protein producers.
“Again this quarter we delivered solid packaged meats earnings that were within the normalized range despite record high raw material costs. These stable earnings are the rest of the Pork Group restructuring plan, which has allowed the company to continue to closely align higher production efficiencies, lower costs and a more coordinated sales and marketing focus.”
In the Pork segment the company had an operating profit of $188.9 million, up 9% from $173.7 million during the same quarter of the previous year. Sales for the segment were $2,478.1 million, up 11% from $2,241.7 million during the same quarter of the previous year.
The Hog Production segment had an operating income of $78.3 million, which compared with a loss of $194.7 million during the same quarter of the previous year. Sales for the segment were $706.6 million, up 51% from $467.5 million.
“The dramatic turnaround in the Hog Production segment continued in the second quarter as lower hog supplies increased live hog market prices while raising costs remained in line with last year and the prior quarter,” Mr. Pope said. “In addition, the Hog Production group cost saving initiative is well underway and should significantly improve our long-term cost structure.”
For the six months ended Oct. 31 the company as a whole had income of $220 million, or $1.33 per share, which compared with a loss of $134.1 million during the same period of the previous year. Sales for the six months were $5,900.1 million, up 9% from $5,407.7 million during the same period of the previous year.