Smithfield Foods has reported a loss of $30 million from the company’s continuing operations for the second quarter of fiscal 2009. This compares to income from continuing operations in the same period last year of $23.4 million. Sales were $3.1 billion versus $2.7 billion in the year ago period.
Net income from continuing and discontinued operations in the second quarter was $4.2 million. After-tax income from discontinued operations was $34.2 million, which includes the gain on the sale of the Smithfield Beef Group and a market value write down of cattle inventories.
"Our pork business continued to perform exceptionally well, even though raw material costs were 15 per cent higher than a year ago,” said C. Larry Pope, president and chief executive officer. “These results were offset by unprecedented adverse conditions in the hog production industry."
Pope said margins on fresh pork sales were at record high levels. Packaged meat margins were strong, tracking slightly below record levels of last year.
Pork operating earnings rose almost 50 percent above a year ago. Overall, fresh pork volume rose three percent and exports continued to be a strong factor in the market. Pork exports rose 29 per cent in volume and 52 per cent in dollar value.
Hog production losses continued due to record high feed costs. Corn costs were 65 per cent higher than a year ago and soybean meal was 59 per cent higher. Murphy- Brown, Smithfield's hog production subsidiary, has liquidated seven percent of its U.S. sow herd since February 2008. Murphy-Brown expects to complete its 100,000 sow reduction program in the third quarter.
"Pork exports have remained strong throughout the quarter and we expect exports to continue at a good rate, albeit at a slower pace than earlier this year,” said Pope. "The third quarter typically is our best season for packaged meats and holiday hams,” he said. "According to the futures markets, hog production should turn profitable in the first quarter of fiscal 2010," he said.
”In tough economic times, people tend to cook at home by shopping at their local grocer,” said Pope. “This is our core business and, as such, we should be better positioned than many as this recession takes hold,"