* Q3 EPS 22 cents vs Wall Street view 19 cents
* Rev $2.88 bln vs year-ago $3.35 bln
* Improvement seen for hog unit in FY 2011
* Shares edge up
(Recasts; adds company comment, details)
By Bob Burgdorfer
CHICAGO, March 11 U.S. hog and pork producer
Smithfield Foods Inc SFD.N posted its first quarterly profit
since 2008, as cost-cutting and herd reduction efforts paid
The company said on Thursday that its hog unit, a long-time
drag on results, is now profitable, and that the restructuring
of its pork segment should boost earnings in this fiscal year
and the next one. It also said it expects pork sales to China
and Russia to resume soon.
During a conference call with analysts, the company warned
that poor-quality corn will pare profits on hogs this quarter
and that higher-priced fresh meat may pinch operating margins
in its packaged meats business.
"I believe that our fourth-quarter profitability on hog
raising will not be as strong as I thought it might have been,"
Chief Executive Larry Pope told analysts in reference to the
Delays in planting the corn crop last year and a protracted
harvest last fall due to excessive rains hurt the quality of
corn, especially in the western Corn Belt.
For the third quarter ended Jan. 31, Smithfield posted net
income of $37.3 million, or 22 cents a share, compared with a
loss of $105.7 million, or 74 cents a share, a year before.
Analysts on average were expecting earnings of 19 cents a
share, according to Thomson Reuters I/B/E/S.
Sales fell 14 percent to $2.88 billion.
Shares of Smithfield, whose quarterly profit topped Wall
Street expectations, were up 1 cent at $19.00 in late morning
trade on the New York Stock Exchange.
The Smithfield, Virginia-based company's hog unit lost
$55.6 million in the just-completed quarter, versus a nearly
$254 million loss a year earlier.
"Looking forward to fiscal 2011, hog production should be
dramatically improved year-over-year and pork results should be
very solid, owing to the restructuring plan that will be
complete," Pope said in a statement.
Smithfield, like other livestock and meat producers, has
struggled over the past two years, hurt initially by high costs
for feed and fuel and later by the recession that slowed meat
The company responded by closing and consolidating meat
plants, reducing its hog breeding herd by 13 percent, and
exiting noncore businesses.
"We believe this will be the last quarter of red ink for
the (hog) segment. If so, hog farming will break an
unprecedented string of eight straight quarters in which the
business lost money," J.P. Morgan analyst Ken Goldman said in a
The resumption of pork sales to China and Russia should
help Smithfield's results. Russia suspended pork imports from
many plants because of traces of antibiotics in the meat. China
suspended imports of U.S. pork amid concerns about the H1N1
(Reporting by Bob Burgdorfer; additional reporting by Viraj
Nair in Bangalore; Editing by Gerald E. McCormick and John