Smithfield reports 'record performance' in third quarter

by Keith Nunes
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SMITHFIELD, VA. — Net income for Smithfield Foods Inc. increased significantly during the third quarter of fiscal 2010, ended Jan. 30. Net income was $202.6 million, equal to $1.22 per share on the common stock, compared with net income of $37.3 million, or 22c per share, during the same period of the previous year.

Sales for the quarter were $3,186.2 million, up 10% from $2,884.7 million during the third quarter of fiscal 2009.

“We are extremely pleased with the record performance of the company in the third quarter,” said C. Larry Pope, president and CEO. “Year to date, our earnings have surpassed that of our last record year, owing to the strength of our restructured Pork segment, which has enabled us to fully capitalize on favorable market conditions. Strong global demand for pork, combined with tight supplies, propelled exceptional fresh pork results in the quarter. Smithfield’s highly competitive cost structure and coordinated sales and marketing platform allowed us to deliver another solid quarter in our packaged meats business.

“We accomplished double-digit growth in several of our key strategic brands and product categories in the quarter, including Armour LunchMakers, Armour Pepperoni, Curly’s Barbecue, Kretschmar Deli and Smithfield Marinade,” he added. “Although the third quarter is generally seasonally the weakest quarter for hog production, results in the Hog Production segment improved substantially and were supported by lower hog supplies, higher live hog prices and favorable grain hedges that kept raising costs in the low $50’s per hundredweight and in line with the prior year.”

Pope said in looking ahead that industry fundamentals are “very encouraging.”

“We anticipate that the Hog Production segment will be profitable in fiscal 2011 and beyond, despite higher grain prices,” he added. “Even though raising costs will increase going forward, low global red meat inventories are supporting a significantly higher live hog futures curve throughout fiscal 2012. Furthermore, the Hog Production Cost Savings Initiative will improve our cost structure $90 million annually by fiscal 2014.”

For the first nine months of fiscal 2010, Smithfield’s net income was $422.6 million, or $2.55 per share. During the same period of fiscal 2009 the company experienced a loss of $96.8 million.

Sales during the nine-month period were $9,086.3 million, up from $8,292.4 million during fiscal 2009.
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