Smithfield Foods today (6 December) reported a slump in second-quarter profits but the US pork group’s shares rose as underlying earnings beat forecasts.
The company booked a 91% drop in net income for the three months to 28 October after it was hit by a debt extinguishment charge. Smithfield said the charge related to its move to paying down secured debt to improve its balance sheet.
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Adjusted second-quarter EPS totalled $0.61 in the quarter, down from $0.76 last year but well-ahead of analyst expectations. In a note released earlier this week (4 December), BB&T Capital Markets analysts forecast Q2 EPS of $0.38 a share.
The second quarter weighed on the first-half numbers. Half-year net income fell to $72.6m, down from $202.8m in the first six months of last year. Consolidated operating profit in the six months dropped to $310.1m, down from $397.9m. Smithfield said the unsatisfactory performance of its hog unit dented the result.
The revenue decline in the six months was less steep and sales dipped to $6.3bn, down from $6.4bn.
Looking ahead, Smithfield predicted a “strong performance” in the back half of the year, adding its packaged meats business would “lead the way”.
Smithfield shares were up 1.14% in morning trade, climbing to $23.16 at time of press.
