Smithfield’s Foods Net Profit Fall 91% Due to Charge (SFD)

Shares of America’s largest producer of pork , Smithfield’s Foods Inc. (NYSE: SFD) edged up on Thursday after the company , announced better-than-expected fiscal second quarter earnings, thanks to rising margins and strong growth in volume.

Shares gained almost 2.5 percent in premarket trading.

The company also said that it expects strong growth in coming quarters.

Smithfield, which generates about 46 percent of its entire revenue from packaged meat business that includes brands such as John Morrell, Farmland and Armour, said that it expects latest Smithfield Pecan Praline and Caramel Apple spiral sliced hams and Cook’s spiral sliced hams will bolster packaged food revenue in the fiscal third quarter.

Since last year the company has been aggressively launching some new brands, including Eckrich Bacon Lovers Deli Meats and Kretschmar.

Smithfield said that its margins in packaged meat segment climbed by 7 percent in the fiscal second quarter, compared to 5 percent growth in the year earlier quarter.  The company attributed low material cost for higher margins. Volume rose by 2 percent in the second quarter.

Nevertheless, revenue for the period fell by almost 3 percent to $3.23 billion.

Operating margins in hog production segment stood at negative 4 percent as cost of grains soared while live hogs fetched lower prices.

For the quarter ended October 28^,  the Company reported  net income of  $10.9 million, or 7 cents per share, compared to $120.7 million, or 74 cents per share, in the year earlier quarter.

In the recently concluded quarter, the company took a charge of $120.7 million against early debt-extinguishment expenses, which translated to a per-share charge of 54 cents. In the year ago quarter, the company took a similar charge of two cents a share.

Thus earnings after excluding debt related transactions or Non-GAPP earnings stood at 61 cents per share compared to 76 cents in the year earlier period.

Economists polled by Thomson Reuters had most recently forecasted earnings of 45 cents on revenue of $3.30 billion.