THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, August 22, 1996 TAG: 9608220395
SECTION: BUSINESS PAGE: D3 EDITION: FINAL
SOURCE: BY LON WAGNER, STAFF WRITER
LENGTH: 39 lines
Higher hog prices and the addition of sales from John Morrell & Co. helped Smithfield Foods Inc. more than double its sales between the first quarter of fiscal 1996 and this fiscal year's first quarter, the company said.
Smithfield Chairman and CEO Joseph W. Luter III credited the company's ``vertical integration'' strategy for salvaging profitability during a quarter when high hog prices siphoned profits from Smithfield's pork-processing operations.
Norfolk-based Smithfield reported a net income of $746,000, or 2 cents per share, for the 1997 fiscal first quarter ended July 28, compared to a net loss of $4.4 million, or 27 cents per share, in the first quarter of 1996.
The company's sales jumped to $892.9 million during the first quarter of 1997, compared to $367.3 million in the same quarter last year, the company said. Smithfield paid $58 million in cash and stock last December to Chiquita Brands International Inc. for John Morrell & Co., whose sales were not part of fiscal 1996's first quarter results.
With hog prices rising, Smithfield is essentially being squeezed in one part of its operation - its fresh pork operations, which lost money in the quarter. But higher hog prices helped it offset that loss with profits in another area: hog production.
Smithfield owns 86 percent of the massive hog production operation Brown's of Carolina Inc. and smaller parts of hog production businesses with some of the nation's biggest hog growers - Carroll's Foods Inc., Murphy Family Farms and Prestage Farms.
``The same industry fundamentals that caused hog prices to approach record highs and put tremendous pressure on fresh pork margins have led to near-record profits for hog producers,'' Luter said.
Smithfield also said the introduction of its Lean Generation pork products into grocery stores continued as planned.
``Sales of Smithfield Lean Generation Pork are meeting our expectations and are anticipated to pick up even greater momentum as the year progresses,'' Luter said. by CNB