Smithfield Foods, Inc. stated that profit fell 10.7% in its quarterly earnings report on August 25, 2005. Net income for the first quarter of fiscal 2006 was $49 million, or $.44 per diluted share, versus net income last year of $54.9 million, or $.49 per diluted share. Sales were $3 billion, compared to $2.7 billion last year.

The company attributed the decline to weakness in the pork market and losses internationally due to a temporary plant closing in Poland and very strong competitive pricing pressures in France.

"I am satisfied with the company's performance in the current quarter, given several negative factors in the marketplace," said Joseph W. Luter, III, Smithfield's chairman and chief executive officer. "I am particularly pleased with our processed meats business. We continue to focus on using all our hams and bellies internally and in growing the pre-cooked category."

Pork sales remained strong thanks in part to solid gains in the pre-cooked category and increased volumes in bacon and hot dogs. Smithfield continued to advance its bacon and ham strategies, as ground was broken recently for a new state-of-the-art ham cooking facility and five new pre-cooked bacon lines are being installed to compliment the existing 13 lines.

In the hog production segment, live hog market prices averaged $51 per hundred weight, 10 percent below last year, while lower grain costs produced raising costs of $40 per hundred weight compared to $43 per hundred weight a year ago.

The beef segment recorded earnings above a year ago due to a sound performance from its newly-formed cattle feeding joint venture. Beef pricing was weak and most export markets remained closed.

The company noted that pork sales tend to slump somewhat during the summer months represented in the report, and should rise over the next three quarters.

"The second and third fiscal quarters are generally the strongest quarters of the year for our pork operations," said Luter. "Given the current outlook, I fully expect that fiscal year 2006 will be another strong year for Smithfield Foods."

Smithfield Foods has delivered a 26 percent average annual compounded rate of return to investors since 1975. With sales of $11 billion, Smithfield is the leading processor and marketer of fresh pork and processed meats in the United States, as well as the largest producer of hogs.

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