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June 16, 2009

<img src=" http://www.joplinglobeonline.com/images/zope/tuesday.gif" border=0> Smithfield Foods posts smaller-than-expected loss

(AP) — Smithfield Foods Inc., the nation’s largest hog producer and pork processor, posted a smaller-than-expected fiscal fourth-quarter loss today as pork sales remained stable. The company said the swine flu outbreak had no significant impact on results.

Its shares rose 6 cents to $11.24 in morning trading.

The Smithfield, Va.-based company lost $78.8 million, or 55 cents per share, in the three months ended May 3, in contrast to a profit of $2.4 million, or 2 cents per share, a year ago.

The loss was smaller than the 60 cents per share loss analysts polled by Thomson Reuters had expected. Analysts’ estimates typically exclude one-time items.

Revenue dipped 1 percent to $2.85 billion from $2.87 billion, while pork sales edged up slightly to $2.46 billion. There was one extra week in the current fiscal year.

Analysts forecast higher overall sales of $3.06 billion.

Chief Executive Larry Pope said in a statement that the company’s packaged meats business performed well during the quarter and will likely produce strong results in the future.

But the hog production segment faces pressure from live hog oversupply and the existing ethanol policy. Pope believes the mandate for increased corn-based ethanol usage is detrimental to hog production, as corn prices have gone up since the plan was announced. Corn is the primary source of livestock feed.

“This is a dynamic the food industry has never before faced and has the unintended consequence of increasing food costs for the American consumer in the midst of a global recession,” Pope said.

As for the swine flu outbeak, Pope said it had a short-term impact on U.S. fresh pork demand, which hurt May results.

“As the consumer received more accurate information about the virus, we saw domestic market conditions begin to move back to more normal levels,” he said.

Smithfield is still dealing with some swine flu related restrictions in international markets such as China, which is hurting first-quarter exports.

For the year, Smithfield lost $190.3 million, or $1.35 per share, compared with a profit of $128.9 million, or 96 cents per share, in the previous year.

Loss from continuing operations was $242.8 million, or $1.72 per share. The prior year’s income from continuing operations was $139.2 million, or $1.04 per share.

Annual sales rose 10 percent to $12.49 billion from $11.35 billion.

Smithfield has more than $1.1 billion in available liquidity and lowered overall debt by more than $890 million in the current fiscal year. It is in ongoing refinancing talks with various lenders.

Pope said the company heads into 2010 with the goal of continuing to restructure its pork business, lowering debt, boosting liquidity and strengthening its balance sheet.

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