Smithfield Foods, the largest US pork producer, said fiscal third-quarter profit beat analysts' estimates, as results were boosted by sales of higher-margin branded products like ready-to-eat meats.
Smithfield posted net income of $54.5 million (€62.45m), or 48 cents a share, compared with $80.8 million, or 73 cents, a year ago. Year-ago results include a one-time gain of $43.6 million, or 39 cents a diluted share, from the sale of IBP common stock.
Excluding the stock sale, profit rose 46 per cent. Analysts had forecast third-quarter earnings of 38 cents to 41 cents a share in the quarter, with an average of 40 cents, according to market research firm Thomson Financial/First Call.
The better than expected results came in meat processing." Also, commodity prices were favourable to them, as were hog prices," said Jeffrey Kanter, analyst at Prudential Securities. Though the company produces many of the hogs it processes, it also buys some in the market.
Sales in the quarter ended 27 January rose 36 per cent to $2.1 billion (€2.4billion), boosted by acquisitions, as well as the emphasis on branded products.
"The improved profitability reflects our strategy to transform our meat-processing operations from a provider of commodity fresh pork to a marketer of higher margin, value-added products," said Joseph Luter, chairman and chief executive officer.Smithfield lost out to rival Tyson Foods in its attempt to acquire beef processor IBP a little over a year ago and has since made smaller acquisitions to expand its beef business. Luter said the company expects to make more acquisitions this year.
"We will take opportunities as they present themselves," Luter told analysts during a conference call. "But at the same time, we are not going to grow for growth's sake."