Smithfield Foods, Inc. reported operating income for the third quarter of the fiscal year 2008 of US$59.1 million compared to US$62.1 million last year.
For the third quarter, net income of US$54.6 million was generated including an after-tax loss of US$4.5 million from discontinued operations. 2007’s third quarter net income of US$60.4 million included an after-tax loss of US$1.7 million from discontinued operations.
Results for the third quarter were negatively impacted by a significant increase in the company’s estimated effective tax rate.
Sales, however, rose amounting to US$3.8 billion, compared to US$3.3 billion a year ago.
Pork profit up
Profits generated from the pork segment rose to US$141.1 million from US$310.9 million in January 2007 on account of the acquisition of Premium Standard Farms in May. Exports of pork have grown significantly. Packaged pork margins have also improved with the volume of fresh pork also rising 35%.
Pre-cooked product categories continued to grow, with several convenience-oriented lines showing double-digit growth, including pre-cooked bacon, sausage, ribs and entrees.
As a result of considerably lower hog prices and higher feed costs, hog production operations did not fair well.
Operating profit was lower in the international segment than in the same period last year – dropping from US$46.4 million down to US$ 31.0 million.
Groupe Smithfield experienced a slight decline in sales volume as well as competitive price pressures which decreased margins in the private label, cooked ham and cooked sausage categories in the French and Dutch markets.
Animex operations in Poland continued its trend of improved earnings in spite of hog prices well above last year.
“We enjoyed very strong fresh pork margins that were much higher than historical levels as a result of lower hog costs and strong industry exports”, said C Larry Pope, president and chief executive officer. “I am very pleased with our packaged meats margins, which benefited from low raw material costs and a continuing focus on this business.”
“Looking forward to the fourth quarter will likely be very difficult, as our hog production operations probably will not achieve profitability. The key to overall results will be the extent to which our pork segment results offset anticipated weak performance from our hog production segment,” Mr. Pope said.
â€¢ Smithfield Foods