Smithfield earnings supported by pork operations, beef sale

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By staff and wire reports

SMITHFIELD, Va. — Smithfield Foods Inc. on Thursday reported a small profit thanks only to its pork division and the sale of its beef processing and cattle feeding operations. 

The company’s pork and packaged meats operations which include the Cook’s Ham plant in Lincoln and the Farmland Foods pork plant in Crete, continued to bolster the company.

“Our pork business continued to perform exceptionally well, even though raw material costs were 15 percent higher than a year ago. These results were offset by unprecedented adverse conditions in the hog production industry,” said C. Larry Pope, president and chief executive officer. “Raising costs were at record high levels as we were consuming high-priced grain purchased last summer. Meanwhile, hog prices were well below our raising costs.”

Pope said that fresh pork profit margins were at record high levels.

In spite of live hog costs much higher than a year ago, pork operating earnings rose almost 50 percent above a year ago. Overall, fresh pork volume rose 3 percent and exports continued to be a strong factor in the market. Pork exports rose 29 percent in volume and 52 percent in dollar value, the company said.

The Smithfield, Va.-based company says profit fell to $4.2 million, or 3 cents per share, from year-ago profit of $17.4 million, or 13 cents per share. Latest-quarter results included a gain on the $580 million sale of its beef processing and cattle feeding operations.

Losses from continuing operations totaled 21 cents per share, compared with year-ago profit on the same basis of 17 cents.

Sales rose to $3.15 billion from $2.75 billion, helped by pork exports, but corn costs were 65 percent higher than a year ago and soybean meal costs surged 59 percent.

Analysts surveyed by Thomson Reuters expected a loss of 10 cents per share on higher revenue of $3.2 billion.

Butterball LLC, the company’s joint venture turkey operation, posted a substantial loss versus a year-ago profit as higher grain prices dramatically increased costs. Butterball announced production cutbacks during the quarter.

Looking ahead, Smithfield Foods says the next two quarters will be difficult due to high grain costs, but production cutbacks in chicken and beef should strengthen pricing.

In Nebraska, Smithfield employs almost 500 people at the Cook’s plant in Lincoln,  almost 2,000 at the Farmland plant in Crete,  almost 400 at a Hastings plant that produces sausage, bacon and meatballs, and almost 200 in Omaha at a plant that makes pepperoni and dry sausage.