011024 Smithfield Sees High Hog Prices Boosting EarningsOctober 20, 2001Chicago - Smithfield Foods Inc., the No. 1 U.S. pork producer, said on Tuesday it expects fiscal second-quarter earnings to exceed analysts' forecasts, led by rising profits from hog production. The company said it expects to report earnings of 54 cents a diluted share for the three months ending Oct. 28, up from 42 cents a year earlier. Analysts were expecting profits of 45 cents to 50 cents a share, with an average estimate of 47 cents, according to data tracker Thomson Financial/First Call. Hog production profits are rising due to higher live hog prices this year than a year ago, Smithfield said, while margins in the meat processing business remain comparable with year-earlier levels despite those higher prices. Smithfield, which has made several acquisitions this year to build its beef business, expects to close a $250 million deal for No. 5 U.S. beef packer Packerland Industries on Monday, General Counsel Richard Poulson said. The company lost a bidding war late last year for No. 1 U.S. beef packer IBP. Inc. to No. 1 chicken processor Tyson Foods Inc. “The meat processing outlook is above what we were looking for,” said BB&T Capital Markets food analyst Andrew Wolf, “and demand for pork has stayed pretty strong.” Smithfield's business has been leaning more toward retailers, such as grocery stores, than to restaurants and other food-service operations, Wolf said. The company will probably continue to have a strong year, he said, adding that since the attacks on New York and Washington, there has been somewhat of an industry shift toward retail as people are more likely to buy groceries than dine out. Shares of Smithfield were up 24 cents at $20.09 in midday New York Stock Exchange trade. They have fallen about 12% since trading resumed after the Sept. 11 attacks, but are up more than 30% year to date.
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