Smithfield Foods Inc. (SFD), the world's top hog producer and pork processor, said Friday its fourth-quarter earnings declined 30 percent from the year-ago period, which included a gain on the sale of Schneider Corp. (search) and profit from discontinued operations.

Income fell to $85.4 million, or 76 cents per share, from $122.7 million, or $1.09 per share, a year ago. The latest period includes $4.4 million, or 3 cents per share, received in a legal settlement.

Excluding gains and discontinued operations, the company would have earned $71.1 million, or 63 cents per share, in the fourth quarter of 2004.

Sales rose 16 percent to $2.92 billion from $2.52 billion last year. Analysts surveyed by Thomson Financial were looking for earnings of 73 cents per share on sales of $2.8 billion in the latest quarter.

Smithfield said its hog production operations benefited from a strong live hog market during the quarter. Raising costs were down from the prior year and the previous quarter, reflecting lower grain costs and increased efficiencies.

In the pork segment, despite strong demand from export markets, Smithfield said fresh pork margins were depressed by high raw material costs. The company's beef segment recorded a modest loss as industry conditions also remained depressed.

Smithfield said pork exports rose 30 percent above a strong quarter last year, with key product categories — including pre-cooked ribs, hot dogs and dry sausage — growing at double-digit rates. The company's processed meats margins improved somewhat in spite of higher raw material costs.

Smithfield noted that beef volume declined 3 percent year-over-year, as weak demand was compounded by closed export markets, tight cattle supplies and high cattle costs.

For the full year, Smithfield earned $296.2 million, or $2.64 per share, up from $227.1 million, or $2.03 per share, the year before. Excluding items, the company earned $162.7 million, or $1.46 per share.

Sales rose sharply to $11.35 billion from $9.27 billion last year.

Analysts surveyed by Thomson Financial were looking for slightly higher full-year profit of $2.65 per share on sales of $11.25 billion.

In addition, the Smithfield board approved a new 2 million share repurchase program. Under this plan, the company plans to buy back shares from time to time in open market or private transactions, subject to market conditions. Including the new program, Smithfield currently has an authorization to purchase 2.9 million shares. The company has about 111.3 million common shares outstanding.

Shares of Smithfield rose 36 cents, or 1.2 percent, to $29.32 on the New York Stock Exchange (search), where they have traded in a 52-week range of $23.27 to $34.64.