000754 IBP Profits of 24% on Higher Hog Costs

Dakota Dunes, SD - Beef and pork producer IBP Inc. reported a 24% decline in second quarter income, but beat Wall Street expectations as higher hog costs cut into profits and offset strong beef and meat export demand.

IBP reported second quarter 2000 profits of $59 million, or 55 cents per diluted share, compared with $78 million or 73 cents per diluted share, before nonrecurring charges, during the same period in 1999.

A poll of Wall Street analysts by First Call/Thomson Financial pegged IBP's second quarter earnings at 52 cents a share.

Net sales for the quarter were $4.2 billion versus $3.6 billion last year. Prior year results were restated to reflect the acquisition of Corporate Brand Foods America Inc., which was accounted for as a pooling of interests, the company said.

“Beef and pork demand has been strong both domestically and internationally, and the outlook remains positive,” Robert Peterson, IBP chairman and chief executive officer, said in a statement. “Our fresh pork operations and Foodbrands America were profitable during the quarter, however, both faced higher raw material costs compared to last year, when live hog prices were significantly lower.”

Recent pig crop reports project increased hog supplies as the industry moves into the fall season. Profitability in hog production, due in part to inexpensive grain costs, is also expected to result in expanded hog supplies in 2001, IBP said.

Earnings from operations generated by IBP Fresh Meats fell to $97 million during the quarter, compared to $108 million, before nonrecurring charges, during the same period in 1999.

Second quarter export sales were up 20% over the year-ago period, IBP said.

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