SMITHFIELD, VA. — With the help of a significant improvement in the hog production segment and strong results in the pork segment, Smithfield Foods, Inc. returned to profitability during the first quarter.
For the quarter ended Aug. 1, the company had net income of $76.3 million, equal to 46c per share on the common stock, which compared with a loss of $107.7 million during the same quarter of the previous year. Sales were $2,901.3 million, up 7% from $2,715.3 million during the same quarter of fiscal 2010.
“Fiscal 2011 is off to a great start with record first-quarter earnings,” said C. Larry Pope, president and chief executive officer. “The business environment was very favorable in the Pork segment and sharply improved in the Hog Production segment during the first quarter. The hog production cycle has turned, and our fresh pork and consumer packaged meats businesses are delivering solid and consistent earnings, owing to the success of the Pork Group restructuring last year and strong discipline in this segment. Although the first quarter is generally the most difficult quarter for fresh pork, the company generated very strong fresh pork earnings, bolstered by solid exports and low protein supplies, which created an environment of strong profitability. Overall favorable market dynamics benefitted the company in all segments.”
The pork segment had an operating profit of $113.3 million, up 12% from $101 million during the same period of the previous year. Sales in the segment were $2,413.5 million, down 7% from $2,251.8 million during the same quarter of the previous year.
The hog production segment had an operating profit of $63.8 million, up from a loss of $180.2 million during the same period of the previous year. Sales for the quarter were $648.3 million, up 36% from $476.4 million during the same quarter of the previous year.
“We will continue to focus on maximizing margins in our Pork segment, despite the comparatively higher raw material costs,” Mr. Pope said. “The pork segment will continue to benefit from tight protein supplies as slaughter levels and freezer stocks continue to be lower year over year. The second quarter is generally a seasonally strong quarter for fresh pork, and we expect to deliver solid margins in this segment going forward.”