US meat group Smithfield Foods has today (8 September) reported an increase in first-quarter losses as the weak performance at its hog unit offset “record” earnings from packaged meats.
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Revenues fell from US$3.14bn to $2.72bn in the three-month period, hit by lower consumer spending in the wake of the recession and concerns over swine flu.
Losses from continuing operations totalled $107.7m, up from $29.1m in the prior year. The result included a $34.1m impairment charge linked to its hog production farm assets and pre-tax debt extinguishment charges totalling $7.4m.
However, the company emphasised that its liquidity levels remain “in excess” of $1bn, with a new $1bn US credit facility and $625m bond issue strengthening its balance sheet.
According to Smithfield, deepening losses at its hog unit outweighed increased profitability at the company’s packaged meats business.
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By GlobalDataIn an effort to readdress supply and demand in the hog market, Smithfield cut its sow herd by an additional 3% in the period, bringing its total reduction to over 13% in the last six quarters.
Smithfield said that pork segment restructuring activities remain “on-time and on-budget” and that benefits have begun to take hold.
For the full results from Smithfield click here, or check back later for just-food’s post-conference call insight.
