SMITHFIELD, VA. — Solid margins in packaged meats and higher hog prices weren’t enough to offset weakness in fresh pork and international segments for Smithfield Foods, Inc., which reported a 36% decline in net income for the first quarter of fiscal 2014.
Click the infographic to view the company’s financial results for the quarter.
“Normal seasonal weakness in fresh pork was exacerbated by declines in key export markets, namely Japan, as well as China and Russia,” said C. Larry Pope, president and chief executive officer. “Higher raising costs in our hog production businesses in Eastern Europe and Mexico adversely impacted earnings in our international segment.”
Net sales climbed 10% on the strength of packaged meats, led by double-digit growth of Armour and Curly’s brands. The company increased market share in cooked dinner sausage, dry sausage and marinated pork categories and expanded distribution of its Eckrich cooked dinner sausage, Gwaltney hot dogs, Smithfield bacon, Curly’s barbecue, Armour dry sausage and portable lunches and Smithfield and Farmland marinated pork.
Hog production earnings nearly tripled on higher hog prices, lessening the negative impact of weakness in other segments.
“The first quarter should mark the low point of the year for Smithfield,” Mr. Pope said. “We will continue to execute on our long-term strategic growth plan, focused on improving our earnings stream and migrating Smithfield further toward a consumer packaged meats company.”Going forward, Smithfield Foods remains focused on increasing consumer marketing, product innovation and capital investment. The previously announced acquisition by Hong Kong-based Shuanghui International Holdings Ltd. for $7.1 billion, including the assumption of debt, is expected to close in the second half of 2013, subject to shareholder approval and review by the Committee on Foreign Investment in the United States.