Smithfield adjusted profit beats on packaged meats business

Smithfield Foods Inc's second-quarter profit beat estimates as margins rose and volumes grew in its packaged meats business, and the largest U.S. pork and hog producer said it expects the growth to continue for the rest of its fiscal year.

The company said it expects its new Smithfield Pecan Praline and Caramel Apple spiral sliced hams and Cook's spiral sliced hams to boost packaged food revenue in the current quarter.

Smithfield gets about 46 percent of its revenue from packaged meats, including brands such as Armour, Farmland and John Morrell.

The company has been introducing new brands such as Eckrich Bacon Lovers Deli Meats and Kretschmar over the past year.

Margins in the packaged meats segment rose to 7 percent in the second quarter from 5 percent a year earlier on lower material costs. Volume at the business rose about 2 percent.

Total revenue fell nearly 3 percent to $3.23 billion.

Hog operating margins fell to a negative 4 percent, hurt by higher grain costs and lower live hog prices.

The company, however, expects lower supplies of competing proteins to boost hog prices in the second half of its fiscal year, ending April 2013.

Net income fell to $10.9 million, or 7 cents per share, in the quarter ended Oct. 28 from $120.7 million, or 74 cents per share, a year earlier.

Excluding debt-related transactions, the company, which also owns the Gwaltney, Margherita and Healthy Ones brands, earned 61 cents per share.

Analysts on average expected the company to earn 45 cents per share on revenue of 3.30 billion, according to Thomson Reuters I/B/E/S.

Smithfield shares, which have risen more than 15 percent in the past three months, closed at $22.90 on the New York Stock Exchange on Wednesday.

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