Smithfield profits up 60 percent for third quarter 2016

Smithfield’s net income reached US$144 million in Q3, up 73 percent.

Smithfield Foods executives touted income and profit increases in their third quarter earnings conference call on October 26. Total operating profits increased 60 percent for the third quarter of 2016 compared to 2015. Net income increased 73 percent. Smithfield Foods is owned by China’s WH Group.

“Bottom-line is, our momentum is forward leaning,” said Smithfield Foods President and CEO Ken Sullivan during the call.

Total operating profits for 2016’s third quarter hit US$246 million, up from US$154 million last year, said Sullivan. Net income increased to US$144 million for the third quarter, compared to US$83 million for the same period in 2015.

Sales dollars were up in all segments, according to Glen Nunziata, Smithfield Foods chief financial officer, except live production. International sales increased, despite a five percent negative impact from foreign currencies. Volume increased in all segments, as well.

Year to date profits also increased from US$528 million at this time of the year in 2015 up to US$693 million, said Nunziata.

Smithfield pork profits

“Fresh pork results were a huge factor for us this quarter,” said Nunziata.

Year to date operating profits reached US$200 million higher than last year, although sales volumes remained flat and selling prices actually decreased.

“The story here is simple,” said Nunziata. “The value of meat cuts continued to outpace our raw materials costs.”

Packaged meat results were also solid, he said. Packaged meat pulled in a third quarter 2016 profit of US$137 million versus US$112 million last year.

Live production losses

After an US$82.5 million loss in the first quarter for Smithfield’s live production division, the second quarter yielded a profit of US$15 million. The third quarter was profitable as well, at US$35 million.

However, Nunziata cautioned that the fourth quarter may hold more losses, resulting from lower hog prices. Smithfield could see a loss of US$6-7 per head in 2016, totaling approximately US$100 million.

Smithfield and Hurricane Matthew

Hurricane William will not have a major effect on Smithfield’s fourth quarter, said Sullivan in response to a question.

“As bad as that storm was, we actually survived it remarkably well,” he said.

A few plants were closed, mostly to keep commuting workers safe, but few animals were lost and no hog farm lagoons were breached. In total, the losses were probably less than US$10 million, he said, but he didn’t’ have exact numbers.

Tim Wall is a staff reporter at WATT Global Media.