Smithfield reports $4.2 million Q2 loss
SMITHFIELD Va. – Smithfield Foods, Inc., a subsidiary of Shuanghui International Holdings Ltd. reported a loss of $4.2 million for the second quarter ended Oct. 27, 2013.
The company attributed the loss to several factors, including losses in the company's Pork segment and costs associated with the merger with Shuanghui. The loss was the balance of a $16.6 million net loss and net income of $12.4 million.
Operating profit in the Pork segment tumbled $123.8 million on a significant increase in domestic live hog prices that were only slightly offset by both higher packaged meat sales prices and higher fresh meat market prices.
Current year sales in the segment increased despite 3 percent lower volume, Smithfield said. An average increase of 9 percent drove the increase. Fresh pork operating profit sharply declined despite an 8 percent increase in average selling prices. Smithfield attributed the result to an 18 percent increase in domestic live hog prices. Packaged meats operating profit declined on a 12 percent increase in selling prices.
Additionally, Smithfield's merger with Shuanghui incurred "professional fees" of $34.7 million and additional interest expense of $17.3 million.
International operating profit declined $21.1 million on significantly higher hog raising costs and lower average selling prices.
"We will continue to execute our long-term strategic growth plan to improve earnings and migrate the company more towards a value-added consumer packaged meats company," the company said in its earnings statement. "We believe this plan will produce broad-based gains in volume, market share and distribution across our core brands and key product categories. The combination of those gains, an improving product mix toward differentiated, branded and value-added products, as well as loosening export market restrictions in our fresh pork business and higher contributions from our international meat processing business, should provide significant long-term growth potential for Smithfield.
"The remainder of calendar 2013 should reflect strong pork margins above the normalized range for fresh pork and within our packaged meats normalized range," the company added. "Seasonally low hog prices will offset improved efficiencies and productivity in our Hog Production segment with operating margins expected below the normalized range. International segment results should show improvement."