US meat processor Smithfield Foods has reported a sharp rise in fourth-quarter profit, driven by improved results from the company’s hog production operations.
The company posted net income of US$122.7m, or $1.09 per share, for the fourth quarter to 2 May, versus net income of $5.1m, or 5 cents per share, in the year-ago period. Fourth quarter sales were $2.5bn compared to $1.8bn last year.
The latest quarter results include an after-tax gain of $49m, or 44 cents per share, related to the sale of Schneider Corporation completed on 5 April. Earnings from continuing operations, excluding Schneider Corporation results, were $71.1m or 63 cents per share, compared with $4.2m, or 4 cents per share, a year earlier.
Smithfield said the sharply higher earnings in the fourth quarter were due primarily to substantially improved results of the company’s hog production operations resulting from a 33% increase in live hog market prices, as well as the inclusion of the results of Farmland.
The pork segment experienced improved earnings of 70%, due to the very strong results of Farmland and favourable fresh pork conditions. The beef segment returned to profitability in the quarter after several months of unprofitable operations following the discovery of a single case of BSE in Washington State in December 2003, and the subsequent ban on beef exports from the United States to most foreign countries.
For fiscal 2004, the company reported net income of $227.1m, or $2.03 per share, compared to $26.3m, or 24 cents per share, in the prior year. Sales rose to $9.3bn from $7.1bn a year ago.
Benefiting from a 27% increase in live hog prices year-over-year, the company’s hog production group recorded a substantial operating profit versus a large loss in fiscal 2003, a positive earnings swing of $234.1m.
Smithfield also said it has embarked on a concentrated strategy to grow its bacon business, both raw and precooked. The strategy will entail expansion of current bacon capacity by the equivalent of 15 new bacon production lines and development of 100 million pounds of new bacon volume, an increase in the business of more than 20%.