Smithfield Foods, the world’s largest pork producer, said yesterday (1 March) that its third quarter profits fell by 27% due to declining pork prices and escalating production expenses.
Net income fell from US$97.5m, or $0.87 per diluted share, for the third quarter of 2005 to $71m, or $0.63 per diluted share, for the third quarter of 2006.
Sales declined only 4% for the quarter from last year’s levels, to $2.95bn, despite higher volumes due to lower average pork prices. Selling, general and administrative expenses increased by 8% to $183.5m. Hog production earnings fell by 55% for the quarter.
For the year-to-date, net income fell to $171.6m, or $ 1.53 per share, compared to $210.8m, or $1.88 per share, in the third quarter of last year, while sales rose to $8.8bn from $8.43bn.
“Looking forward to the fourth quarter, live hog prices and futures have rallied recently. Fresh pork margins are very weak and difficulties in the beef industry persist. We continue to expect good results in processed meats and solid profitability in hog production. All-in-all, we are guardedly optimistic about the fourth quarter in view of current market conditions,” said Joseph W. Luter, III, chairman and chief executive officer.