Tight livestock supplies drive down IBP earnings in first quarter
As expected, tight livestock supplies contributed to reduced first quarter earnings for the US's largest meat packer, IBP inc., company officials reported last week.
However, they also noted that improved market ready supplies of cattle are forecast for the next several months, while increased hog numbers are expected for the remainder of the year. Both factors should contribute to improving earnings for the company.
Net earnings for the period totalled $20 million or $0.19 per diluted share, compared to $60 million or $0.54 per diluted share during the same period last year. Net sales for the quarter totalled $4.1 billion, compared with $4.0 billion in 2000.
"The industry experienced reduced cattle numbers and weights during the quarter partly because of the extreme winter weather," Robert L. Peterson, IBP chairman and chief executive officer, said. "However, we anticipate improved market conditions. Projections call for continued growth in cattle numbers during the spring and summer months. Meanwhile, greater hog supplies are expected in the last half of the year."
Operating earnings across IBP's fresh meat operations, which include Beef Carcass, Beef Processing, Pork and All Other Segments, during the first quarter were $47 million, down 55% from the $104 million recorded during the first quarter 2000. Live cattle prices were 14% higher in the first quarter compared to the same period last year, while commercial fed cattle slaughter was down 9% during the quarter.
First quarter 2001 total export sales were down 5% compared to the same period a year ago. Export volumes for the period decreased 2%. The decline was primarily due to market changes in Japan and Korea, where IBP experienced a banner year in 2000. A surplus of beef and pork in storage, coupled with food safety concerns triggered by media coverage about cattle industry conditions in Europe have dampened sales there.
Nevertheless, IBP's export of cured and tanned hides grew during the first three months of 2001. For the full year 2001, the U.S. Meat Export Federation forecasts overall .S. red meat exports will exceed last year's levels.
