CHICAGO – Smithfield Foods Inc. (SFD) Thursday said quarterly earnings more than doubled due to higher hog prices and the hog and pork producer's acquisition of Farmland Foods last year.
Earnings would have been even higher, but the company locked in lower prices for its hogs with futures contracts earlier this year. It said that would also be the case in the current quarter, with results expected to be hurt by about $35 million by such futures contracts.
Earnings for the fiscal first quarter ended Aug. 1 were $54.9 million, or 49 cents per share, compared with $22.1 million, or 20 cents per share, a year earlier.
Analysts on average expected earnings of 47 cents per share, according to Reuters Estimates.
The Smithfield, Va.-based company has the country's largest hog herd and produces about 14 million market hogs a year. It is also the nation's fifth-largest beef producer, with about 6 percent of the U.S. market.
The company said it would have a favorable benefit of $12 million to $15 million in the current quarter from grain purchase deals.
"This was a strong quarter, as both pork and hog production improved at the same time, this is not usually the case, certainly not in the summer months," Joseph Luter, Smithfield's chairman and CEO, said in a statement.
Sales for the first quarter were $2.65 billion, up from $1.98 billion a year earlier.
The hog unit had an operating profit of $99.6 million, compared with $58.1 million a year earlier.
Pork operations had an operating profit of $21.8 million, compared with a year-ago loss of $17.6 million, due largely to the addition of Farmland Foods (search) and strong exports.
Smithfield bought Farmland, the nation's sixth-largest pork producer, in October 2003.
Operating profit for the beef unit dropped to $1.8 million in the first quarter from $31.9 million a year earlier, due in part to a drastic drop in beef exports after the U.S. case of mad cow disease last December.
"Our beef results were disappointing, but were something we simply could not control," said Luter.
The beef segment results include almost $3 million in losses related to the closing of the company's Showcase Foods (search) case-ready meats facility in Philadelphia. It expects additional charges of $6 million to $8 million in the first half of fiscal 2005 related to that closing.
Smithfield shares were up 12 cents or 0.5 percent at $25.20 on the New York Stock Exchange (search).