Source: MEATINGPLACE, 11/7/14


Smithfield Foods, acquired by China’s WH Group last year, reported a surge in third-quarter profit and said it may expand hog production next year amid record operating margins in the division.

Hog production operating margins climbed to a record at 17 percent, or $42 per head, fueled by productivity gains due to operational improvements and by favorable market conditions. Operating profit in the unit increased 188 percent, also reaching a record high.

The porcine epidemic diarrhea virus, or PEDv, reduced hog supplies and boosted live hog market prices.

"Barring a reemergence of PEDv, which remains a real wild card, we could see modest pork production expansion in 2015, although lower prices should spur additional export demand,” said Smithfield Chief Executive C. Larry Pope.

Packaged meats
Packaged meat operating profit increased 43 percent on a 4 percent volume gain, as the company’s products continued to take market share and expand distribution channels. Operating margins were 6 percent, or 18 cents per pound.

“Momentum in our value-added packaged meats business continues to accelerate. Margins were resilient in the face of extremely high raw material costs,” Pope said.

Fresh pork
Fresh pork operating margins declined 1 percent, or $2 per head, which was an improvement over last year as lower domestic protein production and solid global demand supported a 19 percent jump in the USDA pork cutout. The company processed 9 percent fewer hogs as PEDv disrupted pig flows.

Overall, Smithfield’s net income rose 340 percent to $155.3 million, with sales up 11 percent to $3.7 billion.

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