Smithfield Posts Profit, Helped By Pork Business

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SMITHFIELD, Va. (AP) — Smithfield Foods Inc. posted a profit for its fiscal second quarter after a loss a year ago as increasing demand for pork led to higher profit margins. The meat producer's earnings handily beat analyst expectations.

It says improving pork sales were key. Fresh pork operating profit improved as higher prices offset rising feed costs.

The Smithfield, Va., company reported net income of $143.7 million, or 86 cents per share, for the three months ended Oct. 31. It lost $26.4 million, or 17 cents per share, a year ago.

Analysts expected earnings of 56 cents a share for the latest quarter.

It says revenue rose 11 percent to almost $3 billion. Analysts expected revenue of $3.2 billion.

The company said profit margins on fresh pork prices rose in part because supplies have dropped in the United States. The company processed 13 percent fewer hogs than it did during the same period last year, in part because it closed a slaughterhouse in Sioux City, Iowa, in April.

While supplies have dropped, export demand has increased, firming up prices that had plummeted during the economic downturn that was compounded by a consumer scare over the swine flu outbreak, which both the industry and government said was unfounded.

"Supply and demand remained well in balance in the quarter. Reduced protein supplies, coupled with strong protein demand, supported record high pork prices in all trade channels," CEO C. Larry Pope said in a statement.

As a result, live hog prices rose 54 percent compared to last year. Smithfield raises live hogs so it can benefit when prices rise. The company said it expects live hog prices to remain near their current level of roughly 54 cents a pound through 2011, and it expects a year of record net income, although it did not release a specific earnings forecast.

Copyright 2010 The Associated Press.



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