Smithfield Foods announced today that it had a net loss of $103.1 million, or 73 cents per share, in the third quarter of fiscal 2009. For the nine months of the year, the company has seen losses of $164 million, compared to a gain of $137 million last year. Yet in spite of the numbers, the company is optimistic about its performance.
“In spite of the fact that we’re reporting a $100 million loss, I’m actually a little bit pleased. The results of much of the business came in better than I thought it would,” said Larry Pope, president and CEO of Smithfield, said in a conference call this morning. “The parts of the business that we’re in a position to manage, I think we’re doing an excellent job of in positioning ourselves. As the hog market and corn market turned in the opposite direction over the last year, we are in a position to perform very well going forward.”
Pope pointed out that hog production continued to be a driver of the negative results, thanks to higher corn costs and an oversupply of hogs on the market from last fall. Smithfield’s success stories for the quarter were its fresh meats and packaged meats, which Pope noted had record margins in the quarter. The export market also did very well, with strong showings in Mexico, Japan, Korea, Taiwan, Australia and Russia.
“Although a number of plants in this country have been delisted, I think Smithfield has about 60% of all the plants that can ship into Russia, so we have the opportunity to continue to ship into that country,” he said. “We’re shipping at record levels. I continue to believe in the export markets.”
Smithfield’s results included an $84.8 million charge tied to the restructuring of its pork group. Six plants were closed in the restructuring, which Pope stressed had been in the works for more than a year. As a result, Smithfield’s capacity utilization has increased from 80 percent to 90 percent. “I think it will make us a very efficient packaged meats processor,” Pope said.
“I am also pleased that we continued to make significant progress on improving our balance sheet, reducing debt and increasing liquidity,” he added.
Smithfield’s results beat analyst’s estimates, according to Bloomberg. As a result, the company’s stock gained by more than a dollar, or 17 percent, by 9:57 AM. If it closes at that price, it would be the biggest gain since Dec. 8.
Sources: Smithfield Foods Inc., Bloomberg