("Smithfield Foods 1Q Loss Widens Amid Weak Demand, Hog Woes,"
published at 7:38 a.m. EDT misstated revenue for the latest
quarter. The corrected version follows.)
DOW JONES NEWSWIRES
Smithfield Foods Inc.'s (SFD) fiscal first-quarter loss widened
amid continuing weak demand and woes at its hog-production
business. The results missed Wall Street estimates.
Smithfield has been hurt by depressed hog prices and demand for
some time amid the recession, with worries about the H1N1 flu
adding to its challenges. The company - whose brands include John
Morrell, Farmland and Butterball - has been cutting costs and
refinancing debt.
President and Chief Executive C. Larry Pope said Tuesday "the
hog production industry will very likely continue to incur losses
until an industry-wide liquidation occurs." Smithfield has cut its
U.S. hog herd 13% over the past six quarters.
The meat-packing industry may be shaken up further by Brazilian
food giant JBA SA's (JBSS3.BR) expected deal to acquire bankrupt
chicken producer Pilgrim's Pride Corp. (PGPDQ). JBS has been
growing through acquisitions in recent years, including its
purchase of Smithfield's beef-processing unit last year.
For the quarter ended Aug. 2, Smithfield reported a loss of
$107.7 million, or 75 cents a share, compared with a prior-year
loss of $13.2 million, or 10 cents a share. Excluding items such as
write-downs on hog-production assets and debt-extinguishment
losses, the loss from continuing operations was 56 cents.
Revenue decreased 13% to $2.72 billion.
Analysts polled by Thomson Reuters most recently were looking
for a loss of 55 cents on revenue of $2.82 billion.
Gross margin fell to 3.6% from 6.2% amid the revenue drop.
At its hog-production segment, Smithfield's loss widened as
revenue slid 24%. The fresh pork segment swung to a loss as sales
tumbled 23% amid lower selling prices, volume and exports.
The company's packaged-meat business saw earnings triple to a
quarterly record despite revenue falling 1.6%. Volume fell 9%, but
higher prices made up much of that decline while the bottom line
was also aided by cost-cutting. The pork and turkey producer in
July said the prior quarter marked the last to be "significantly"
affected by grain positions it entered last year. Smithfield locked
in some prices just as commodities peaked.
Shares closed at $13.04 on Friday and didn't trade premarket.
Markets were closed Monday for Labor Day. The stock has lost 41% of
its value in the past year.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
tess.stynes@dowjones.com
