• 57°

Smithfield Foods posts smaller-than-expected loss

NEW YORK (AP) ó Smithfield Foods Inc., the nation’s largest hog producer and pork processor, posted a smaller-than-expected fiscal fourth-quarter loss Tuesday as pork sales remained stable despite the swine flu outbreak.
The Smithfield, Va.-based company said although the swine flu dampened demand for pork in the U.S. in May, the market is already back up to normal levels.
Chief Executive Larry Pope said on a conference call with investors that the company’s loss in the quarter had far more to do with rising animal feed costs, which dug into profits in the company’s hog production division.
“I can summarize the quarter and I can summarize the year very, very succinctly in saying that we have a hog production issue,” Pope said. “It doesn’t take a rocket scientist to figure out the issue is grain costs.”
Overall, Smithfield Foods lost $78.8 million, or 55 cents per share, in the three months ended May 3, in contrast to a profit of $2.4 million, or 2 cents per share, a year ago.
The loss was smaller than the 60 cents per share loss analysts polled by Thomson Reuters had expected.
The hog production segment lost $170.8 million alone in the quarter. The division raises hogs ó which means the company buys lots of animal feed, which is made from corn and soybeans. Both grains, particularly corn, have become more expensive in the past year.
Pope blamed the country’s ethanol policy, in part, for the rising costs. Pope called a national mandate for increased use of corn-based ethanol a “hidden tax” on producers and consumers. The demand for corn to meet the mandate for ethanol production has made corn a more expensive commodity, he said.
“It has been devastating to this industry,” he added on the call.
Grain costs weren’t the only culprit, however. The entire industry has been saddled with an oversupply of meat, which typically leads to lower selling prices for meat. Pork prices have generally fallen in recent months, hurt also by the recession, which has kept producers from boosting retail prices.
To help boost prices, Pope said the company will cut its sow herd by another 3 percent. The cut is on top of a 10 percent chop the company made in 2008.
“Further reductions in supply are likely necessary to put meat prices higher, and we are doing our part,” said Chief Financial Officer Robert Manly on the call.
Still, Pope warned investors that the company will likely report losses in its hog production segment into the second quarter of the next fiscal year.
“I think this coming year’s going to be certainly better than last year,” he said, but added “that’s not saying much.”
There were some bright spots in the quarter.
Revenue dipped just 1 percent to $2.85 billion from $2.87 billion, while pork sales edged up slightly to $2.46 billion. Analysts forecast higher overall sales of $3.06 billion.
Pope said the company’s packaged meats and retail businesses were performing well while the international business was a “mixed bag.”
Smithfield is still dealing with some swine flu-related restrictions in international markets such as China, which is hurting first-quarter exports.
For the year, Smithfield lost $190.3 million, or $1.35 per share, compared with a profit of $128.9 million, or 96 cents per share, in the previous year.
Annual sales rose to $12.49 billion from $11.35 billion.
Smithfield has more than $1.1 billion in available liquidity and lowered overall debt by more than $890 million in the current fiscal year. It is in ongoing refinancing talks with various lenders.
Shares fell 8 cents to $11.10 in morning trading.
óóó
AP Business Writer Michelle Chapman contributed to this report.

Comments

Comments closed.

Crime

One charged, another hospitalized in fight between cousins

Local

Bell Tower Green renamed to honor Stanbacks; Nancy Stanback receives key to city

Business

Commissioners green light additional houses at Cherry Treesort in China Grove

Education

A.L. Brown will hold in-person, outdoor graduation

Local

Granite Quarry awards FEMA contract for Granite Lake Park

Local

City to vote on apartment developments, final phases of Grants Creek Greenway project

High School

High school football: North receiver McArthur a rising star

Columnists

Carl Blankenship: Pollen and prejudice make their return

News

Harris pitches $2.3T spending plan on trip to North Carolina

Nation/World

Murder case against ex-cop in Floyd’s death goes to the jury

Crime

Sheriff’s office: Man takes deputies on chase with stolen moped

Coronavirus

Afternoon, evening COVID-19 vaccination clinic planned Thursday

Crime

Concord man charged with woman’s murder in drive-by shooting

Ask Us

Ask Us: Have city, county elected officials received COVID-19 vaccine?

Local

City gives away nearly 100 trees during ‘We Dig Salisbury’ event

Local

Political Notebook: Bitzer expects most ‘Trump-like’ candidate to be favorite in state’s Senate race

Crime

Blotter: Concord man arrested in Rowan for indecent liberties with children

Coronavirus

Half of US adults have received at least one COVID-19 shot

Nation/World

Police: FedEx shooter legally bought guns used in shooting

News

Hester Ford, oldest living American, dies at 115 … or 116?

Local

Size of pipeline spill again underestimated in North Carolina

BREAKING NEWS

Kannapolis Police searching for suspect who fled scene of homicide

Education

RSS superintendent talks district’s future, strategic plan survey

News

Complaints and fines pile up against unpermitted landfill in southwest Rowan County