990742 IBP Profits Double As Meat Demand Rises

Dakota Dunes, SD - IBP Inc. said its second-quarter operating profits more than doubled to $77 million, topping expectations, as meat demand rose.

IBP, which also makes appetizers and other products for foodservice operations, said it earned 82 cents a diluted share in the second quarter, excluding a $10.4 million, or 11-cent-a-share, after-tax charge to cover the cost of closing a beef processing plant. In the same period last year, IBP earned $34 million, or 36 cents a share.

Quarterly sales rose to $3.5 billion from $3.3 billion a year ago.

Analysts had expected IBP to earn 66 cents a share in the second quarter, according to First Call, the research firm which tracks earnings estimates.

“All of our major operating divisions have been running smoothly and successfully,” Robert Peterson, chairman and chief executive officer, said in a statement.

“Strong performance by our fresh meat operations along with continued growth in the foodservice market have been the driving forces behind this earnings growth,” he said.

IBP said brisk retail demand and better sales of higher-margin processed meats led to stronger beef profitability during the quarter. Pork margins also improved.

Export sales volumes increased 5% in the second quarter, although export dollar sales fell 4%, IBP said. Japan continued to be IBP's largest export destination, although year-to-date export volumes were down 3%.

For the first six months, IBP said improving economic conditions led to a 73% volume gain in Korea and a 25% increase in Taiwan. Export volumes to Mexico were up 12% during the first six months of 1999.

The company said larger feedlot placements over the past several months indicated cattle supplies would be larger than previously expected for the remainder of 1999 and U.S. beef production was expected to reach record levels. IBP said projections for hog supplies were also on the rise.

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