US: Smithfield losses narrow on packaged meats

Strength in Smithfield Foods' packaged meats business resulted in a narrowing of the firm's losses for the first nine months of the year.
 
For the period to 31 January, Smithfield saw its losses decrease to US$96.8m from $169.7m in the prior year. In the third quarter, the firm swung to a net profit of $37.3m from a net loss of $105.7m a year earlier.
 
Net sales for the nine-month period, however, dropped to $8.29bn from $9.64bn in the comparable period of 2008. In the third quarter, sales also dropped to $2.88bn from $3.35bn in the prior year.
 
Operating profit for the nine months increased to $23.5m from a loss of $132m, while for the third quarter operating profit increased to $96.5m from a loss of $135.5m in the comparable period of the prior year.

"The third quarter demonstrated the ongoing strength of our packaged meats business, which continues to deliver very strong margins. We are extremely focused on this part of the business, it is paying dividends and the restructuring program is beginning to have an impact," said Larry Pope, president and CEO.

However, he added that the firm's "biggest obstacle" for the past two years has been the lack of profitability in its hog production segment.
 
"As of the third quarter, those losses have substantially diminished and the futures markets are trending favourably for us," said Pope. "We anticipate that fresh pork margins will improve as hog slaughter levels continue to decline and the Sioux City plant is closed in April. In addition, we expect that fiscal 2010 should be the second best year ever for Smithfield fresh pork exports."

Looking forward to fiscal 2011, Pope added that hog production should be "dramatically improved" year over year and pork results should be "very solid", owing to the restructuring plan that will be complete.
 
"If the current trends continue and the export markets reopen, I believe we could have a very good year in fiscal 2011," he concluded.

Click here for the full results release and click here for Smithfield's outlook for packaged meats and hog production.