Meat & Poultry -- January 2014 - 12

BUSINESS NOTES

Smithfield reports $4.2 million loss in Q2
Smithfield Foods Inc., a subsidiary of China's Shuanghui

on significantly higher hog-raising costs and lower aver-

International Holdings Ltd., reported a loss of $4.2 mil-

age selling prices.

lion for the second quarter ended Oct. 27, 2013. The com-

"We will continue to execute our long-term strategic

pany attributed the loss to several factors, including losses

growth plan to improve earnings and migrate the com-

in the company's Pork segment and costs associated with

pany more towards a value-added consumer packaged

the merger with Shuanghui. The loss was the balance of

meats company," the company said in its earnings state-

a $16.6 million net loss and net income of $12.4 million.

ment. "We believe this plan will produce broad-based

Operating profit in the Pork segment tumbled $123.8

gains in volume, market share and distribution across

million on a significant increase in domestic live-hog pric-

our core brands and key product categories. The combi-

es that were only slightly offset by both higher packaged-

nation of those gains, an improving product mix toward

meat sales prices and higher fresh-meat market prices.

differentiated, branded and value-added products, as well

Current year sales in the segment increased despite

as loosening export market restrictions in our fresh-pork

3 percent lower volume, Smithfield said. An average in-

business and higher contributions from our international

crease of 9 percent drove the increase. Fresh pork operat-

meat processing business, should provide significant long-

ing profit sharply declined despite an 8 percent increase in

term growth potential for Smithfield.

average selling prices. Smithfield attributed the result to

"The remainder of calendar 2013 should reflect strong

an 18 percent increase in domestic live hog prices. Pack-

pork margins above the normalized range for fresh pork

aged meats operating profit declined on a 12 percent in-

and within our packaged meats normalized range," the

crease in selling prices.

company added. "Seasonally low hog prices will offset im-

Additionally, Smithfield's merger with Shuanghui in-

proved efficiencies and productivity in our Hog Produc-

curred "professional fees" of $34.7 million and additional

tion segment with operating margins expected below the

interest expense of $17.3 million.

normalized range. International segment results should

International operating profit declined $21.1 million

show improvement."

Sanderson earnings surge in Q4
Fourth-quarter earnings for Laurel, Miss.-based Sand-

the improved poultry-market prices more than offset the

erson Farms Inc., soared on higher prices for poultry and

higher feed costs, and our margins improved significantly

lower cash prices for corn and soybeans in the quarter.

during fiscal 2013. For the year, we sold 3.031 billion lbs.

Net income for the three months ended Oct. 31 was
$45.3 million, or $1.97 per share, compared to net income

of dressed poultry, another record, compared with 2.952
billion lbs. in fiscal 2012."

of $9.3 million, or 41 cents per share in the fourth quarter

Sanderson noted that overall market prices for poul-

of 2012. Revenues for the quarter climbed to $727.1 mil-

try products were higher in the fourth quarter compared

lion compared to $648.4 million in the year-ago quarter.

to a year ago, but declined significantly from peaks ear-

"The fourth quarter of fiscal 2013 marked a strong fin-

lier in the year.

ish to a successful year for Sanderson Farms and the poultry industry," said Joe Sanderson Jr., chairman and CEO.

allowed us to significantly reduce outstanding debt and

"We reported record annual sales of $2.683 billion, a 12.4

strengthen our balance sheet," Sanderson said. He point-

percent increase over fiscal 2012. While poultry markets

ed out that construction of a new poultry complex in Pal-

improved compared to fiscal 2012, grain prices remained

estine, Texas, began in October. Operations at the new

near record-high levels during much of fiscal 2013 be-

facility are scheduled to start in the fi rst quarter of 2015,

fore moderating during the fourth quarter on optimism

and its production will represent a 16 percent increase in

surrounding the current year's grain harvest. However,

"We are pleased that our profitability during fiscal 2013

the company's capacity.

* Meat&Poultry * January 2014 * www.MeatPoultry.com

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Meat & Poultry -- January 2014

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