Smithfield Foods beats expectations
- June 16, 2009
Smithfield Foods Inc. reported a smaller-than-expected loss for the fourth quarter.
The company reported a $78.8 million loss, or 55 cents per share, compared with net income of $2.4 million during the same quarter a year ago. Analysts had expected a loss of 62 cents per share.
During the fourth quarter, revenues were $2.85 billion, compared with $2.87 billion last year.
Loss for the year was $190.3 million, or $1.35 per share.
CEO C. Larry Pope called the year one of the most difficult in the company’s history. He said Smithfield has been hurt by fluctuating grain and oil markets, an oversupply of protein and the global recession.
In response to the tough climate, the company has reduced its sow herd, closed plants, changed operations and refinanced its debt agreements.
However, the company’s packaged meat business and pork segment reported record profits for the quarter. It expects business on its hog production side to continue to be weak. “We are concerned about our hog production business as it deals with an oversupply of live hogs and the unintended consequences of the current ethanol policy. This mandate toward increased usage of corn-based ethanol is resulting in more than 30 percent of the U.S. corn crop being diverted from animal feed to ethanol production,” Pope said in a statement.
Smithfield will cut its herd by 3 percent after already reducing it by 10 percent.
The outbreak of the H1N1 influenza, commonly known as the swine flu, did not affect results from the quarter, which ended May 3. Pork sales dropped after reports of the flu spread. Many consumers assumed they could catch the flu from eating pork, which is untrue.
The company said its domestic sales are recovering, but export business is still down because of restrictions, especially in China.