Smithfield: sales up, profit down
The processing business announced sales had held steady at US$3.1bn, but net income had fallen from $82.1m for the same quarter last year, to $61.7m this year, with the company reporting a poor performance on its fresh pork operations.
Fortunately, packaged meats proved resilient and delivered good results, according to the company’s financial statement. Volume on the packaged front increase by 4% while operating profit shot up by 29% to $130.6m.
C Larry Pope, president and chief executive, said: “Our first-quarter results underscore the ongoing strength of our packaged meats business, which delivered record margins and solid volume gains. These results also emphasise the fact that the key driver of our business model is our packaged meats business, which generated the majority of our earnings again this quarter.”
Brands played a strong role in this success, the company claimed, pointing to significant sales and volume increases for brands such as Armour, Carando, Farmland and Smithfield. “We also increased share in a number of strategic product categories, including bacon, dry sausage, hot dogs and portable lunches, and expanded distribution in the deli meats, dry sausage and portable lunches categories,” Pope added.
International operations also performed well, particularly hog operations in Eastern Europe, while approval for its Romanian processing operations resulted in benefits from export access to European Union markets.
However, fresh pork remained challenging: “Naturally, we were disappointed with the poor performance of our fresh pork business, as the fresh pork complex remained under pressure due to higher supplies and weak domestic retail demand, although exports remained historically strong. Despite higher raising costs in our hog production business, that caused margins to decline, the segment remained profitable.”
