World’s largest pork producer, Smithfield Foods Inc. (NYSE: SFD) reported on Thursday that fiscal third-quarter income rose 3% as bottom line was boosted by strong sale growth in its packaged foods business.
The Smithfield, Virginia-based Company, whose packaged foods business generates roughly half of the entire top line, said robust demand from international markets especially from Poland and Romania helped driving up the revenue in its Smithfield bacon and Eckrich and Armour businesses.
“We are excited about the growth prospects for this company as we continue to transform Smithfield into a more value-added consumer packaged meats company. We expect solid earnings in fiscal 2013 and look forward to even stronger results next year,” the Company said in a statement.
For the fiscal third quarter ended Jan 27, Smithfield Foods reported net earnings of $81.5 million or 58 cents a share compared to a profit of $79 million or 49 cents a share, in the same period of last year.
Stripping out onetime items, such as early extinguishment of debt and costs related to business consolidation in Spain’s Campofrio, adjusted earnings came at 69 cents a share while analysts’ consensus estimate was for earnings of 50 cents a share, according to a data compiled by Thomson Reuters.
The Company said that profits were also boosted by lower effective tax rates, particularly in international markets.
Revenue during the period climbed 3% to $3.6 million, which was higher than analysts’ consensus forecast for $3.53 billion. Overall sales volume jumped 5% while packaged meat sales climbed 4 percent to $1.76 billion, the Company said.
For the fiscal 2013 and 2014, the Company anticipates that volume growth in its packaged goods business will be at least 2% to 3%.
However, the Company expects that inadequate supplies and higher prices of other meat products such as beef and chicken will drive up pork retail prices in the current year. Unusually dry and hot summer in the Midwest region last year sent prices of cattle feed such as corn to record high levels. As a result, meat producers were forced to lower supplies which in turn pushed up prices of beef and chicken.