Low live-hog prices and a weak fresh pork market cut into second-quarter earnings for nation's largest pork producer/processing company, accoring to Associated Press newswire reports.
Smithfield Foods officials say the company earned $4.1 million, or 4 cents a share, in the quarter ending Oct. 27. That's down 93 percent from $60.5 million, or 56 cents a share for the same quarter last year.
Higher sales in the company's beef and processed meats businesses helped make up for a 36 percent decline in hog production revenue. Lower hog prices and higher costs for hog feed combined to give Smithfield a loss of $12 a head on its hog production, although company officials say improved production efficiency helped cushion the weak market conditions.
Joseph Luter, Smithfield's chief executive officer, points out the company's strategy to boost profit margins by concentrating on processed meats "is producing highly favorable results." Luter told AP that hog prices remain below levels that would allow Smithfield to breakeven on live hog production. He believes that could remain the case for most if not all of the company's third quarter.
Luter cites the longer-term outlook that live-hog prices should improve because producers have cut production. He expects Smithfield's production group to return to profitability in February and remain there through next summer.
For the first half of the fiscal year, Smithfield earned $15.9 million, or 14 cents a share, down from $117.4 million, or $1.10 a share, a year ago. Revenue rose to $3.96 billion from $3.31 billion a year ago, reports AP.
Smithfield news release and AP newswire