Smithfield Profits Leap 83%

NEW YORK - Nov 30/04 - SNS -- Smithfield Foods, Inc. reported a net income of $58.4 million on sales of $2,719.1 million during the second quarter ending October 31, up from last year's net income of $31.9 million on sales of $2,059.7 million during the same quarter last year.

Earnings in the quarter reflected sharply improved results from hog production due to a 36% increase in live hog market prices year over year. Hog production earnings more than offset lower pork margins and a modest loss in the beef segment.

"As previously announced," Smithfield said in releasing its quarterly results, "commodity futures contracts for live hogs reduced hog production earnings by $36 million, but were partially offset by $12 million in favorable advance grain purchasing contracts. As a result of the advance grain purchasing contracts, the company's raising costs were $42 per hundredweight (100 pounds) for the quarter, up 4% from last year, but 3% lower than raising costs would have been, absent these contracts."

The company said pork prices increased significantly from the prior year, reflecting strong demand both domestically and internationally. Pork export volume grew 30% in the quarter and 22% year to date. While pork prices have increased, these prices have not been sufficient to fully recover the increased raw material costs. As a result, pork segment earnings were below those of last year.

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