Smithfield’s earnings pick up in third quarter
SMITHFIELD, Va. – Strong demand for packaged meats lifted earnings at Smithfield Foods Inc. The company reported double-digit growth in its Smithfield, Eckrich, Farmland and Margherita brands, according to the company.
“Our Smithfield bacon, Eckrich dinner sausage and Armour dry sausage all achieved double-digit growth,” said C. Larry Pope, president and CEO. “We gained market share in the bacon, dinner sausage, dry sausage and ham steak categories. We were also very successful in broadening distribution of our core brands in a number of key product categories including bacon, dinner sausage, deli meats, dry sausage and ham steaks.”
Packaged meats operating profit climbed $8.5 million, or 7 percent, to $125.9 million and volume was advanced more than 5 percent, according to Smithfield. Core brand volume grew substantially at 6 percent. Packaged meats sales and volume grew in retail, foodservice, deli and export segments.
Net income for the third quarter ended Jan. 27 rose to $81.5 million, or 58 cents per share, compared to $79 million, or 49 cents per share in the year-ago period. Sales gained 3 percent to $3.6 billion, resulting from higher volumes in all segments, the company said.
Operating margins for the company's Fresh Pork segment declined 4 percent, or $7 per head. Retail sales volume saw double-digit increases, and export demand was stronger compared to a year ago. Excluding carcass volume in 2012, exports recorded a 19 percent year over year increase. Smithfield processes 3 percent more hogs.
Smithfield's International segment had an operating profit of $43.7 million for the third quarter. The Eastern European hog production business was strong, while packaged meats earnings grew in Poland and Romania. Campofrío's margins declined on recessionary pressures and high raw material costs.
The company's outlook is for consistent growth in packaged meats, including increased market share and broader distribution of its core brands.
"We expect margins at the high end of the normalized range with at least 2 percent to 3 percent volume growth in fiscal 2013 and for this trend to continue into fiscal 2014," Pope said.
Smithfield plans to improve its product mix in fresh pork through differentiated, branded and value-added products for domestic and export markets. The company is also executing its strategy to improve earnings and spur growth by increasing consumer marketing programs, product innovation and capital investment. Additionally, the company plans to target branded and value-added acquisitions to take the lead in consumer packaged meats.
"We are excited about the growth prospects for this company as we continue to transform Smithfield into a more value-added consumer packaged meats company," Pope said. "We expect solid earnings in fiscal 2013 and look forward to even stronger results next year."