Smithfield Foods, Inc. reported a loss of $30 million from continuing operations for the second quarter, or $.21 per diluted share, compared to income last year from continuing operations of $23.4 million or $.17 per share.

Net income from continuing and discontinued operations in the second quarter was $4.2 million, or $.03 per diluted share.  After-tax income from discontinued operations was $34.2 million, or $.24 per diluted share, and includes the gain on the sale of Smithfield Beef Group and a market value write down of cattle inventories.  In the second quarter last year, net income of $17.4 million, or $.13 per diluted share, includes an after-tax loss from discontinued operations of $6.0 million, or $.04 per diluted share.  Sales were up in the second quarter, at $3.1 billion versus $2.7 billion last year.

As previously announced, the company completed the sale of Smithfield Beef Group, its beef and cattle feeding operations, to JBS S.A. for $580.0 million in cash in the current quarter, recording a pre-tax gain on the sale of $95.2 million.  Additionally, Smithfield expects to receive approximately $150 million in proceeds from the sale of the retained cattle inventory, net of associated debt.

Despite an increase in live hog costs from last year, pork operating earnings rose almost 50 percent above a year ago.  Overall, fresh pork volume rose three percent and exports continued to be a strong factor in the market.  Pork exports rose 29 percent in volume and 52 percent in dollar value.

“Our pork business continued to perform exceptionally well, even though raw material costs were 15 percent higher than a year ago,” said C. Larry Pope, president and chief executive officer.  “These results were offset by unprecedented adverse conditions in the hog production industry.”

“Pork exports have remained strong throughout the quarter and we expect exports to continue at a good rate, albeit at a slower pace than earlier this year. U.S. pork remains the best valued pork in the world,” he said.

Packaged meat margins were slightly below record margins from last year as high raw material costs could not be fully passed through in higher prices.  While overall packaged meats volume decreased slightly, pre-cooked ribs, led by the Curly’s brand, rose 33 percent.

International operating profits increased 20 percent from last year.  Groupe Smithfield’s results include $3.2 million in after-tax restructuring charges related to closing a major plant in France, and are below a year ago due to high raw material costs and lower margins from a change in consumer demand from branded products to private label.

Smithfield’s hog production and turkey investments suffered losses as a result of continued high feed costs.  Corn costs were 65 percent higher than a year ago and soybean meal was 59 percent higher.  Murphy-Brown, Smithfield’s hog production subsidiary, has liquidated seven percent of its U.S. sow herd since its February 2008 announcement in order to balance supply and demand, and expects to complete its 100,000 sow reduction program in the third quarter.

At quarter end, the company had over $900 million in available liquidity.

“The sale of our beef processing and cattle feeding operations will allow Smithfield to focus on our core business.  The sale has significantly strengthened our liquidity position and the outlook for continued strong liquidity is very favorable,” Mr. Pope said.

Mr. Pope said, “While the next two quarters will be difficult due to record high grain costs, I am very optimistic about fiscal 2010 and beyond after these grain inventories have been worked through.  The operational changes we have made, and those we are planning, combined with lower supplies of all proteins, should be very good for this company…In tough economic times, people tend to cook at home by shopping at their local grocer.  This is our core business and, as such, we should be better positioned than many as this recession takes hold.”

With sales of $12 billion, Smithfield Foods is the leading processor and marketer of fresh pork and packaged meats in the United States, as well as the largest producer of hogs. For more information, visit www.smithfieldfoods.com.

Disclaimer: This website may contain "forward-looking" information within the meaning of the federal securities laws. The forward-looking information may include statements concerning the company's outlook for the future, as well as other statements of beliefs, future plans and strategies or anticipated events, and similar expressions concerning matters that are not historical facts. The forward-looking information and statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, the statements. These risks and uncertainties include availability and prices of livestock, raw materials and supplies, livestock costs, product pricing, the competitive environment and related market conditions, operating efficiencies, access to capital, the cost of compliance with environmental and health standards, adverse results from ongoing litigation and actions of domestic and foreign governments.