U. S. hog and pork producer Smithfield Foods Inc. posted its first quarterly profit since 2008 and said its hog unit, a longtime drag on results, should improve in the coming fiscal year.
The company also said pork sales to China and Russia should resume soon, and restructuring its pork segment should boost earnings in this fiscal year and the next one.
Smithfield, like other livestock and meat producers, has struggled over the past two years, hurt initially by high costs for feed and fuel and later by the recession that slowed meat sales.
The company responded by closing and consolidating meat plants, reducing its hog-breeding herd by 13 per cent, and exiting non-core businesses.
“Looking forward to fiscal 2011, hog production should be dramatically improved year over year and pork results should be very solid, owing to the restructuring plan that will be complete,” chief executive Larry Pope said in a statement.
The hog unit, the nation’s largest, lost $55.6 million, compared with a year-earlier loss of $253.6 million. Hog prices have increased and feed costs have come down since last year, the company said.
“We believe this will be the last quarter of red ink for the (hog) segment. If so, hog farming will break an unprecedented string of eight straight quarters in which the business lost money,” J. P. Morgan analyst Ken Goldman said in a note.
The resumption of pork sales to China and Russia should help Smithfield’s results. Russia suspended pork imports from many plants because of traces of antibiotics in the meat. China suspended imports of U. S. pork amid concerns about the H1N1 flu.