WASHINGTON (dpa-AFX) - Packaged pork and meat products maker, Smithfield Foods, Inc. (SFD), reported Thursday a profit for the third quarter that declined from last year, as higher raw material costs shaved off its pork segment margins. However, adjusted earnings per share breezed past analysts' expectations.
Sales grew 9 percent to $3.48 billion helped by higher selling prices and volumes in the pork segment, but missed the Street estimate of $3.50 billion by a whisker.
The company expects to end fiscal 2012 strongly and to continue to deliver 'consistently solid' results in fiscal 2013.
'I am very pleased to report another quarter of strong profitability and, in particular, the progress we have made in improving the quality and consistency of our earnings. Notably, our year to date adjusted earnings closely tracked last year's record results,' President and CEO Larry Pope said in a statement.
The food company said its fresh pork segment was particularly impacted by significantly higher raw material costs, as a 23 percent increase in live hog market prices more than offset an 11 percent improvement in the USDA pork cutout.
Despite packaged meats segment volumes declining 1 percent, the company saw strong sales and volume growth of its Armour, Curly's, Farmland, Gwaltney, John Morrell, and Kretschmar brands.
Meanwhile, Smithfield Foods entered into a multi-year, integrated partnership in mid-January with the legendary Richard Petty Motorsports NASCAR team starting in 2012 to engage in promotional initiatives throughout the 2012 racing season for its core brands.
The Smithfield, Virginia-based world's biggest pork processor reported third-quarter net income of $79 million or $0.49 per share, much lower than $202.6 million or $1.21 per share in prior-year quarter.
The results included $0.18 per share in charges related to Campofrio Food Group S.A., while the year-ago quarter included net insurance gains of $0.44 per share.
Excluding special items, adjusted net income for the quarter declined to $0.69 per share from $0.84 per share in the year-ago quarter. On average, 17 analysts polled by Thomson Reuters expected earnings of $0.66 per share for the third quarter. Analysts' estimates typically exclude special items.
Looking ahead, the company expects fresh pork to continue to be a solid contributor to its overall results due to the ongoing healthy export demand. The company also said international business profitability will remain strong in the coming quarters.
SFD closed Wednesday's regular trading session at $22.82, up $0.09 on a volume of 2.04 million shares. In the past 52-week period, the stock has been trading in a range of $17.79 to $25.12.
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