* Third-quarter earnings per share $0.58 vs est $0.50
* Third-quarter revenue rose 3 pct to $3.58 bln vs est $3.53
* Sees rise in pork retail prices in 2013
* Shares rise 9 pct
By Maria Ajit Thomas
March 7 Smithfield Foods Inc, the
largest U.S. hog producer, reported third-quarter results that
beat Wall Street estimates, helped by higher sales of packaged
meat products such as Smithfield bacon and Eckrich and Armour
Shares of the company rose 9 percent to $24.37 in morning
trade on the New York Stock Exchange.
The company said higher demand from international markets,
particularly from Poland and Romania, drove growth in its
packaged meats business.
"Our packaged meats business is on fire," Chief Executive
Larry Pope said on a conference call with analysts.
Sales of packaged meat, which contributes nearly half of
total revenue, increased 4 percent to $1.76 billion while volume
rose 5 percent.
Smithfield, which was founded in 1936 as a pork processing
operation, forecast packaged meat volume growth of at least 2
percent to 3 percent in 2013, a trend it expects to continue in
The company said it expects lower supplies and higher prices
for competing products, such as beef and chicken, to push up
pork retail prices in 2013.
The worst drought in the U.S. Midwest last year pushed up
prices for corn feed, and many livestock producers culled
supplies to combat the effect.
HOG PRICES EXPECTED TO IMPROVE
Smithfield said hog production margins were down 8 percent,
hurt by decreased live hog market prices and increased rearing
costs, but it expects improvements through the fourth quarter
and next fiscal year.
Hog prices have been falling in the last three months as
higher payroll taxes and gasoline prices drove U.S. consumers to
switch to more affordable meats like chicken.
Moreover, Russia and China, the world's largest pork
consumer, have raised concerns about the feed-additive
ractopamine used in pork produced in the United States, hurting
Last month Smithfield said it will be able to supply pork
that is ractopamine-free in time to meet China's March 1
"They are well-positioned to benefit from export demand,"
Davenport & Company LLC analyst Ann Gurkin told Reuters, adding
that the company would gain from the expected production
cut-backs in the European Union.
Gurkin also expects hog production to return to
profitability in 2014, driven by Smithfield's ongoing cost
The company said it expects losses per head in the
mid-single digit range for 2013 hog production but sees hog
prices increasing in the fourth quarter.
"The whole (hog production) economic model will correct,"
THIRD-QUARTER RESULTS BEAT
Smithfield's net income rose to $81.5 million, or 58 cents
per share, in the third quarter ended Jan. 27 from $79 million,
or 49 cents per share, a year earlier.
Analysts on average had expected a profit of 50 cents per
share, according to Thomson Reuters I/B/E/S.
The company said third-quarter earnings benefited from a
lower-than-expected effective tax rate, especially in its
Revenue rose 3 percent to $3.58 billion, above market
estimates of $3.53 billion.