Source:  Tom Johnston, MEATINGPLACE.COM, 3/11/10

Smithfield Foods Inc. said Thursday it recorded its first quarterly profit since 2008 as its hog production businesses slashed losses and its packaged meats segment continued to excel.

The company's long bleeding hog production unit narrowed losses in its third fiscal quarter to $55.6 million, from a loss of $253.6 million in the year-ago period, as costs of production decreased and sales prices rose. Raising costs decreased by $10 to $51 per hundredweight, while prices rose $4 to $44 per hundredweight.

"It looks like the cycle in hog production has turned," CEO Larry Pope told investors in an analysts' call.

The market, Pope said, has continued to move up, and Smithfield's hog production business has so far been profitable in its fourth quarter, but he cautioned that a late-harvested, poor-conditioned corn crop on the East Coast will raise costs in the same period.

"We are taking very stringent efforts to minimize the impact," he said.

Overall performance

For the quarter ended Jan. 31, Smithfield's net income was $37.4 million, or 22 cents per diluted share, compared with a loss of $107.5 million, or 74 cents per share, in the same quarter last year. Sales fell 14 percent to $2.88 billion, with an extra week in the reporting period account for half the decline.

Analysts polled by Thomson Reuters on average expected earnings of 19 cents per share on revenues of $3.28 billion.

Smithfield's restructuring of its pork business, which involved the closure of six plants, will have been completed in April when the John Morrell plant in Sioux City, Iowa, shuts down. Pope said these actions, combined with the reopening of Russia's export market and hopefully the same of China's market, will help results going forward.

Shares of Smithfield were $18.97, down 2 cents, in early-afternoon trading Thursday on the New York Stock Exchange.

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