Dakota City, NE - IBP Inc. said pork profits rose sharply in the second quarter compared with a year ago, while beef remained a disappointment.
“We've also experienced a major turnaround in the profitability of our fresh pork business, compared to a year ago,” Robert Peterson, chairman and chief executive, said in a statement.
“Although improved from the first quarter, beef is our biggest disappointment,” he said. “It continues to be affected by burdensome meat supplies and economic problems in the Far East.”
IBP, the world's largest processor of fresh pork and beef, earned $0.36 per diluted share in the second quarter ended June 27, little changed from last year but above analysts' expectations for $0.26 a share, according to First Call.
IBP said the improved pork profits reflected lower start-up losses at its Logansport, IN plant, the restructuring of pork production and increased hog supplies. The company expects hog supplies to remain strong through 1998 and into 1999.
IBP said it expected cattle supplies to remain ample for the rest of this year. IBP is still pursuing a strategy of developing more value-added, higher- margin products such as retail-ready, fresh ground beef.
“While the performance of our beef operations is below our expectations, we believe it easily exceeds the results of our major competitors,” Peterson said.
He said the company's fed-beef operations have been profitable in 1998, though down significantly from the same period last year.
Large supplies of beef, as well as competing proteins, have pressured product prices and profit margins. Because of higher average live weights, some analysts predict the industry may produce more beef this year than in 1997, creating the largest supply in history, IBP said.
Beef has also been hurt by the weak economic climate in East Asia. Allied product sales to South Korea, the world's largest importer of US cattle hides, have declined substantially, forcing companies like IBP to sell hides to alternative markets. This, and other demand factors, reduced hide values by $16 per head during the first six months of 1998, IBP said.
Press for Information on Placing Your Ad Here
Meat Industry Insights News Service
P.O. Box 553
Northport, NY 11768
Phone: 631-757-4010
Fax: 631-757-4060
E-mail: sflanagan@sprintmail.com
Return to Home Page