Smithfield returns to profit in fiscal 1st Qtr, helped by higher prices for pork

Smithfield posts 1Q profit on higher pork prices

NEW YORK — Smithfield Foods Inc. said Wednesday higher selling prices for pork and improvement in hog market prices helped it return to a profit in its fiscal first-quarter.

CEO C. Larry Pope said the business environment was “very favorable in the pork segment and sharply improved in the hog production segment.” He said his outlook for 2011 remains positive.

“All parts of our business are profitable and we are focused on lowering our hog production segment cost model and capitalizing on our restructured pork group,” he said.

The meat producer reported net income of $76.3 million, or 46 cents per share, for the three months ended Aug. 1. That matched analyst expectations, according to a poll by Thomson Reuters.

The Smithfield, Va., company lost $107.7 million, or 75 cents per share, in the first quarter a year ago.

Revenue rose 7 percent to $2.9 billion from $2.7 billion a year ago. Analysts expected higher revenue of $3.07 billion. Results were helped by higher average unit selling prices in the pork segment and higher live hog market prices, Smithfield said.

Fresh pork revenue rose 10 percent to $1.15 billion, while packaged meat revenue rose 5 percent to $2.41 billion, helped by strong sales of the brands Curly’s BBQ, Off the Bone Lunchmeats, Armour LunchMakers and Kretschmar Deli.

That segment is facing higher costs for raw materials such as corn, but the industry, including Smithfield, has offset those with higher selling prices. Average selling prices in the pork segment rose 15 percent.

The pork industry has been pressured for two years as a glut in supply kept prices low. But supply has been falling over the past two quarters.

In the quarter, the pork segment benefited from tighter protein supplies, with slaughter levels and freezer stocks lower compared to a year ago.

The company cuts jobs and closed factories in its pork segment to lower production and cut costs. Smithfield said that restructuring is basically complete and should save the company $125 million annually.

In Smithfield’s hog production segment, results benefited from fewer hogs marketed, which helped live hog prices rise 38 percent.

Shares rose 22 cents to $16.52.