Sharply higher feed costs due to a 39% increase in corn and a 33% increase in
soybean meal was cited as a reason for the loss. Hog raising costs were $1.20
per kg during the first quarter of fiscal 2009 compared with $0.96 per kg in the
first quarter of last year.
Live hog prices for the quarter increased modestly to $1.09 per kg from $1.05
per kg in the first quarter of fiscal 2008. The slight increase was not
sufficient to recover the sharply higher costs, according to the company.
For the quarter, Smithfield's Hog Production division had a loss of $38.8
million (2008: +$93m) with sales of $725.8 million ($605.6m).
"Given the overall adverse environment of the industry, I am pleased with the
results for the current quarter," said C. Larry Pope, president and chief
executive officer of Smithfield Foods. "Our fresh pork operations and our
packaged meats business performed well in the face of sharply rising input
costs. We are continuing to focus closely on our cost structure and improving
plant operating efficiencies. Also, our new management structure is in place and
moving forward nicely."
Smithfield's Pork division saw its operating income increase from $26.5
million during the first quarter of fiscal 2008 to $61.7 million for the most
recent quarter. Sales for the quarter were $2,579.2 million compared with
$2,228.2 million for the previous year.
The division was supported by an export volume increase of 124% during the
first quarter, with large increases in shipments to China, Russia, Japan, Mexico
and the EU.
Primary reasons for this sharp increase were the rapidly rising costs
elsewhere in the world combined with the weak US dollar.
"The volatile nature of both the domestic and world markets for meat prices
and grains, combined with uncertainty surrounding the economy and the US dollar,
make a prediction of future results very difficult,â€ Pope said.
â€œHowever, we continue to pursue our long-term strategy of emphasising our
packaged meats business and improving our fresh meat operations. This strategy
is working and is improving the base of our business."
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