Smithfield, VA - Smithfield Foods, Inc. reported record second quarter earnings in fiscal 1999. Net income in the quarter ended November 1, 1998 increased to $18.5 million, or $.47 per diluted share, from $15.5 million, or $.39 per diluted share, in the same quarter a year ago.
Net income in the first six months of fiscal 1999 increased to $13.2 million, or $.33 per diluted share, from net income of $9.0 million, or $.23 per diluted share, in the six month period a year ago. The net income in the first half of fiscal 1998 included a nonrecurring charge of $12.6 million ($.32 per diluted share), which reflected penalties imposed against the Company in a case brought by the U.S. Environmental Protection Agency. The judgement has been appealed. Excluding the nonrecurring charge, the Company had net income of $21.6 million, or $.55 per diluted share, in the first half of fiscal 1998.
Sales for the second quarter of fiscal 1999 were $874.4 million, down from $982.7 million in the same quarter of fiscal 1998. Sales for the first six months of fiscal 1999 were $1.7 billion, down from $1.9 billion in the same six- month period a year ago. The decrease in sales in both periods was due to lower unit selling prices for the Company's products, reflecting substantially lower hog and raw material prices, which were not entirely offset by increased unit sales volume in each period.
The record fiscal 1999 second quarter net income reflected substantially improved operating results at the Company's Meat Processing Group which more than compensated for losses at the Company's Hog Production Group.
The Meat Processing Group experienced sharply higher margins, especially on sales of fresh pork, in this fiscal year's second quarter. While margins on sales of processed meats were up, overall results in the processed meats area of the Group's business were adversely affected by a sharp drop in exports of hot dogs to Russia.
The Hog Production Group experienced a sharp reversal in profitability in the current year's second quarter due to the lowest hog prices since 1971. The Hog Production Group incurred a net loss of $.22 per diluted share in this year's second quarter compared to net income of $.08 per diluted share in the same quarter of fiscal 1998.
“Our second quarter results reinforce our belief that being vertically integrated to the extent that we are takes the peaks and valleys out of our earnings and, in effect, makes them more stable as well as predictable,” Joseph W. Luter, III, Chairman and Chief Executive Officer, stated.
“The brisk rate of business in the first three weeks of November further confirms our earlier statement that fiscal 1999 third quarter earnings should set a record,” Luter said.
Smithfield Foods is the largest vertically integrated producer and marketer of fresh pork and processed meats in the United States. The Company's brands include Smithfield Lean Generation Pork, Smithfield Premium, Gwaltney, Patrick Cudahy, John Morrell, Lykes, Esskay, Kretschmar, Valleydale, Jamestown, Dinner Bell, Realean, Patrick's Pride, Great, Tobin's First Prize, Peyton's and others.
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
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