US: Smithfield sees profits plummet

By: just-food.com | 4 December 2008

US pork producer Smithfield Foods has seen first-half operating profit plunge, despite a gain in sales, as high input costs hit its turkey and hog production units.

For the six months to 26 October, Smithfield said operating profit fell to US$3.5m, down from $213.4m posted in the comparable period of 2007.

Losses from continuing operations reached $58.5m, against income of $80m a year ago. The company made a net loss of $8.4m during the first half, against net income of $72m a year earlier.

However, sales for the half rose to $6.29bn, up from $5.36bn in the first half of fiscal 2007, as a rise in pork exports drove earnings at the company's fresh pork unit.

"Our pork business continued to perform exceptionally well, even though raw material costs were 15% higher than a year ago," president and CEO Larry Pope said.

However, he added: "These results were offset by unprecedented adverse conditions in the hog production industry. Raising costs were at record high levels as we were consuming high-priced grain purchased last summer. Meanwhile, hog prices were well below our raising costs."

The company said losses from continuing operations totalled $30m during the second quarter, against income of $23.4m a year earlier.

Second-quarter operating profit fell from $85.4m last year to $1m in Smithfield's current second quarter, during which the company completed the sale of its beef processing and cattle feeding business for $580m.

Second-quarter sales rose from $2.75bn to $3.15bn.

Sectors: Meat & poultry, Seafood

Companies: Smithfield Foods