Pork processor Smithfield Foods Inc reported weaker-than-expected quarterly results, hurt by lower margins in its fresh pork business and disappointing sales, and the company said it would continue its push into consumer packaged meats.
Net sales rose 3 percent to $3.21 billion in the quarter that ended on April 29, but missed analysts' estimates of $3.26 billion.
In a note on Thursday, D.A. Davidson & Co analyst Timothy Ramey said he expected fourth-quarter net sales to rise 9.7 percent. He said strong exports are squeezing supplies and supporting higher domestic prices.
The company's operating profit margin in the quarter fell to 1 percent in its fresh pork business, down from 10 percent a year earlier. It is the largest U.S. pork and hog producer.
In contrast, operating profit margin rose to 7 percent from 5 percent for its packaged meats unit, despite higher raw materials costs. Export shipments were up 13 percent.
The company, which owns the Farmland, Smithfield, Armour and John Morrell brands, said it had gained market share in products such as bacon, dinner sausage, hot dogs and deli meats.
Packaged meats offers Smithfield "the biggest growth opportunities," Chief Executive C. Larry Pope said in a statement.
Smithfield reported fourth-quarter net income of $79.5 million, or 49 cents per share, compared with $98.4 million, or 59 cents per share, a year earlier.
Excluding items, the company earned 43 cents per share. Analysts had expected 53 cents a share, according to Thomson Reuters I/B/E/S.
The company also said it plans to buy back up to $250 million of its common stock over the next two years under a new plan.