MERRIAM, Kan. – Incremental tariffs continue to play into Seaboard Corp’s bottom line according to the company’s earnings report for fiscal 2018.
For the third quarter ended Sept. 29, the Pork segment reported operating income of $2 million, which is down from $59 million reported in third quarter 2017. Seaboard cited Lower prices for pork products along with higher feed costs which were partially offset by higher volumes of pork products sold. Incremental tariffs imposed by Mexico and China also weighed on operating income.
In a securities filing, Seaboard stated that pork sold to international customers that have tariffs like Mexico and China will “continue to have a negative impact on earnings.”
Net sales for the Pork unit for the third quarter were $412 million, an increase from net sales of $404 million reported in the third quarter ended Sept. 30, 2017.
For the nine months of fiscal 2018, net sales in the Pork segment were $1.32 billion compared with $1.19 billion reported in 2017.
Seaboard’s SEC filing said that the increase to the receipt of federal blender’s credits of $42 million, which was recorded as revenue in the first quarter of 2018. Higher volumes and prices of biodiesel sales and higher sales of market hogs to third-parties and affiliates also contributed to results.
Seaboard’s Turkey segment, represented by Butterball LLC, reported an operating loss of $19 million for the third quarter. The company also said there was an operating loss of $29 million for the first nine months of 2018.
Net sales in the Turkey segment totaled $399 million in the third quarter compared to $439 million in 2017. For the first nine months of 2018 ended on Sept. 28, net sales were at $1,046 million, down from $1,143 million reported in year-ago period.
Seaboard reported net turkey sales of $1,651 million compared with $1,402 million in the same period of the third quarter of 2017. For the nine months ended on Sept. 29, Seaboard reported net sales of $4,921 million compared with $4,223 million reported in the year-ago quarter.
Overall, net earnings attributable to Seaboard were $35 million, or $29.93 per common share, compared with $81 million, or $69.28 per common share, reported in the year-ago period. For the first nine months of fiscal 2018, the company reported net earnings of $74 million compared with $224 million in the same period in 2017.
Operating income for the third quarter was $37 million compared with $73 million reported in the third quarter of 2017. Seaboard reported operating income of $166 million in the first nine months of 2018, compared to $196 million reported in the first nine months of 2017.
“Operating income decreased $36 million and $30 million for the three- and nine-month periods of 2018, respectively, compared to the same periods in 2017,” Seaboard said. “The decreases primarily reflected lower margins on pork products sold in the Pork segment, partially offset by higher margins in the CT&M segment and the Federal blender’s credits in the Pork segment for the nine-month period.”