THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, February 22, 1996 TAG: 9602220432
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY LON WAGNER, STAFF WRITER
LENGTH: Short : 48 lines
Last October, when Smithfield Foods extended its distribution agreement with Japanese industrial giant Sumitomo Corporation, the Smithfield-based pork processor was on pace to sell $100 million in pork products in Japan during the year.
That pace has slowed.
Smithfield Foods Inc. reported Wednesday that its net income for the third quarter, which ended Jan. 28, was just half of what it was last year. The company cited tariffs imposed by the Japanese government and abnormally low pork prices last year for the decline from the third quarter of 1995 to 1996.
``Unquestionably, that ($100 million) is probably somewhat higher than what we'll be able to achieve,'' said Smithfield Vice President Aaron Trub. ``They've arranged the pricing to the level where in actuality it's just difficult to import.''
Trub couldn't specify how much in sales to Japan might be lost before the tariffs are relaxed, which is expected to happen by April.
Smithfield's net income of $8.7 million for the quarter paled in comparison to the $17.3 million in net income in the same quarter a year ago, a period in which the company saw profits soar due to abnormally low hog prices.
``Hog costs last year were the lowest in many years,'' Smithfield CEO Joseph W. Luter III said, ``and this permitted the company to achieve unprecedented margins on its fresh pork sales.''
For the first nine months of 1996, Smithfield's net income of $8.9 million, or 47 cents per share, was only about one-third of its net income of $27.5 million for the first nine months of 1995, the company said.
Smithfield's earnings were also squeezed once again by its failed venture into the retail electronics business. The third quarter results included a $2.1 million loss from the discontinued operations of Ed Kelly Inc., the retail electronics company.
Disposing of the company ``took longer than anticipated, leading to deterioration of the subsidiary's value,'' the company said.
``I think the only word to describe that is a disaster,'' said Scott & Stringfellow analyst George Shipp. ``The good news is, it's in the history books now.'' by CNB