The problems confronting the U.S. pork industry are being felt by Smithfield Foods. In a filing with the Securities and Exchange Commission last week, Smithfield said "During the first quarter of fiscal 2010, the record performance of the packaged meats business of Smithfield Foods, Inc. was more than offset by greater than expected losses in the company's hog production segment," according to

As a result of the losses, J.P.Morgan lowered its fiscal 2010 earnings forecast for Smithfield. In addition, Standard and Poor's lowered the company’s credit rating. Smithfield’s first quarter earnings statement is expected on Sept. 8.

Monday, J.P.Morgan analyst Ken Goldman estimated a fiscal 2010 per share loss for Smithfield of $1.33 per share, up from his previous estimate of 37 cents per share loss, says Meatingplace.

"Though we remain bullish long term because the stock's upside potential is excellent, we are increasingly frustrated that an industry in the red for two years refuses to make one simple change: produce fewer hogs," Goldman wrote in a note to investors.

Standard and Poor's Ratings lowered its corporate credit rating on Smithfield to a "B-minus" rating from "B" based on Friday's SEC filing and said it might lower ratings further if liquidity worsens. Smithfield said the company has maintained strong liquidity with approximately $1.1 billion of cash and available borrowing capacity. Read more.

Meanwhile, Stephens Inc. equity analyst Farha Aslam feels Smithfield is likely to either sell more stock or divest some operations in order to raise capital as it faces another unprofitable fiscal year.

Aslam significantly lowered her per share earnings estimate for the company's fiscal 2010, ending in May. She now expects the company to report net losses of $1.75 per share, down from a net loss of 45 cents per share that she previously projected. Her projections are $1.31 below analysts' consensus. 

Aslam expects Smithfield to seek to raise capital in order to reduce its debt-to-capital ratio to a targeted 40 percent-to-49 percent range, from its current level at 53.8 percent.  Aslam wrote that an equity offering is the more likely scenario.

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