Pork, beef and poultry producer Smithfield Foods Inc. has posted a 49.8% fall in first-quarter net income to US$24.6m, or 22 cents a share, with turnover falling by 3.4% to $2.8bn.
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The company said income from continuing operations fell by 20.6% to $38.9m, below analysts’ forecasts.
Smithfield also reported that shortly after the end of the quarter, it completed the sale of substantially all of the assets and business of Quik-to-Fix. In the quarter, the company recognised a $10.4m after-tax write down on the assets in anticipation of the sale and an after-tax loss from discontinued operations of $3.9m.
“We had a respectable quarter even though the markets were not particularly in our favour,” said chairman and CEO Joseph W. Luter, III. “I continue to be pleased that our integrated model delivered results even as overall industry conditions were weak.”
Total pork sales fell from $1.83bn to $1.73bn, while beef sales slid from $721m to $623.7m. Pork operating profits rose from $9.6m to $19.3m. The company said that the pork segment benefited from improved fresh pork market conditions in the last half of the quarter in spite of relatively high hog prices. The results included a $6.5m pre-tax mark-to-market gain on open commodity positions, the company said.
Operating profit from beef fell from $7.3m to $4.9m, with improved results from beef processing offset by losses related to the company’s cattle feeding investments.
Luter said that he was optimistic about the autumn holiday season and the overall trend of the business, and expected a strong hog market and improving demand in the autumn to drive solid earnings for the full fiscal year.
Luter also added that recent and pending acquisitions offered great potential for growth going forward.
“Our recent European investment and pending ConAgra meats acquisition were made at attractive prices and should provide momentum for the future,” Luter said. “The Sara Lee European Meats business, acquired through a joint venture, will give Smithfield a much stronger presence in the Western European processed meats market. Also, the ConAgra Refrigerated Meats transaction in the second quarter will accelerate our expansion initiatives in processed meats in the United States. Further, the combination of the Butterball brand with our Carolina Turkeys joint venture will provide us with the strongest brand in the turkey market.”
