Wednesday, October 17, 2018
News: Page (1) of 1 - 09/08/11 Email this story to a friend. email article Print this page (Article printing at page facebook
Higher prices push up Smithfield Foods 1Q profit
Smithfield Foods 1Q profit rises with higher prices, but disappointed investors pummel shares
By The Associated Press

ST. LOUIS (AP) ' Raising prices and selling more packaged meats pushed up Smithfield Foods Inc.'s fiscal first-quarter net income by 8 percent, but the world's biggest hog producer cautioned Thursday that high feed costs will remain a problem this year.

The company, whose 12 brands include Armour, Farmland and Smithfield, reported slightly higher adjusted net income than Wall Street analysts expected and revenue just short of forecasts.

Shares of the Smithfield, Va., company dropped $1.64, or 7.4 percent, to $20.48 by mid-afternoon.

Smithfield said its fiscal 2012 overall should be "another very good year." The company said it expects to sell 3 percent more packaged meat than during last fiscal year and to maintain its level of profitability, but it didn't offer details.

KeyBanc Capital Markets analyst Akshay Jagdale said in an email to The Associated Press that investors expected a brighter outlook, and they thought Smithfield's first-quarter results would beat expectations more soundly.

"On both accounts, the company somewhat disappointed," Jadgdale wrote. "It did not beat by much and (the) outlook seems slightly incrementally negative."

Smithfield earned $82.1 million, or 49 cents per share, for the three months that ended July 31. That's up from $76.3 million, or 46 cents per share, a year earlier.

Excluding legal costs and other one-time items, Smithfield earned 69 cents per share. Analysts on average expected adjusted earnings of 68 cents per share, according to data from FactSet.

Smithfield's revenue increased 7 percent to $3.09 billion but missed Wall Street's average forecast for $3.14 billion.

Revenue rose in the company's fresh pork, packaged meat and international divisions. Smithfield said the average unit selling prices for its packaged meats rose 8 percent.

Demand for pork appears to be picking up, giving Smithfield the opportunity to raise prices to pass on the higher costs it and other meat producers are paying for corn and soybeans to feed its hogs. Corn and soybeans prices have nearly doubled over the past year.

Charging more has helped Smithfield profit, President and CEO C. Larry Pope told analysts during a conference call.

"I think going forward ... our hog production business will be profitable, and I can't believe I'm saying that," Pope said. "That's the result of supply and demand getting back in balance."

Pope said the company sold more of its core brands in the quarter, including Cook's, Kretschmar and Curly's. He said the Armour LunchMakers, Curly's Tub BBQ, Eckrich hotdogs and smoked sausage, Kretschmar deli and Smithfield marinated product lines also did well.


Chapman contributed reporting from New York. Leonard contributed from St. Louis.

Page: 1


Our Privacy Policy --- About The U.S. Daily News - Contact Us - Advertise With Us - Privacy Guidelines