Smithfield reports net income drop, sales increase
By Derrick Cain
© Copyright Agri-Pulse Communications, Inc.
SMITHFIELD, Va., Sept. 6, 2013 - Smithfield Foods, the largest U.S. pork producer, announced today a decrease in net income of about 32 percent in the first quarter of fiscal year 2013 compared to the same period last year, as well as a 10 percent increase in quarterly sales.
Smithfield said net income was $39.5 million in the first quarter, compared to net income of $61.7 million last year. Sales for the first quarter of FY 2013 were $3.4 billion.
The earnings report comes as the Committee on Foreign Investment in the United States is poised to decide on the proposed purchase of Smithfield by the Chinese company Shuanghui International for about $7.1 billion.
“The key driver of our business continues to be packaged meats where we achieved solid margins, while growing volume, as well as market share and distribution across a number of our core brands and product categories in the first quarter,” said C. Larry Pope, Smithfield president and chief executive officer.
Pope said the operating environment in fresh pork and the company's international business was difficult in the first quarter. Normal seasonal weakness in fresh pork was exacerbated by declines in key export markets, namely Japan, as well as China and Russia. Higher raising costs in hog production businesses in Eastern Europe and Mexico adversely impacted earnings in the international segment.
Historically, Smithfield said, the first quarter is seasonally the weakest period for fresh pork. International operating margins declined to 1 percent largely from higher feed costs in the company's hog production operations.
Pope said the first quarter should mark the low point of the year for Smithfield.
“We will continue to execute on our long-term strategic growth plan, focused on improving our earnings stream and migrating Smithfield further towards a consumer packaged meats company,” he said.
The company seeking to buy Smithfield is the majority shareholder of Henan Shuanghui Investment & Development Co., which is China's largest meat processing enterprise and China's largest publicly traded meat products company as measured by market capitalization.
For more news, go to www.agri-pulse.com