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Mixed results at Smithfield Foods

02/03/2007
 
US meat processor Smithfield Foods, Inc. has reported lower income from continuing operations for the third quarter of $60.4 million, down from $75 million for the comparable period in the prior year. Sales for the quarter increased to $3.3 billion from $2.9 billion a year ago.

For the first nine months, income from continuing operations decreased to $144 million from $175.6 million, whilst sales improved slightly to reach $8.9 billion from the $8.7 billion reported in the same nine-month period of the prior year.

The company’s beef segment reflected improved processing margins in the quarter which were offset by losses in the company's cattle feeding operations. Furthermore, beef margins remained below historical levels due to limited export shipments, an overall shortage of cattle necessary for full processing levels and price pressure on all proteins. The pork segment reflected significantly improved margins in packaged meats which were partially offset by lower margins in fresh pork.Smithfield reported substantially higher earnings in all aspects of its international operations, which included the contribution of a full quarter of profits of Groupe Smithfield, a newly-formed, 50-50 joint venture with Oaktree Capital Management consisting of the company's previously-owned Jean Caby operations in France and the assets of the recently-acquired Sara Lee European Meats business. Operations in Poland were profitable, as was its Romanian business and its joint venture in Mexico. Smithfield's 23% interest in Campofrío, in Spain also experienced improved earnings.



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