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Net income dropped to $4.2 million, or 3 cents a share, compared with $17.4 million, or 13 cents per share in the same quarter a year ago.
Sales rose from $2.75 billion to $3.15 billion in the quarter, which ended Oct. 26.
"It's been a tough quarter for the company," C. Larry Pope, Smithfield's president and chief executive officer, said during a conference call with analysts. "There's probably going to be two more tough quarters for us as grain costs move through. But the light at the end of the tunnel is very bright."
Profits rose nearly 50 percent, to $93.4 million, in Smithfield's pork business and 20 percent, to $11 million, in its international division. The hog-production business, however, recorded a loss of $58 million for the quarter. Pope blamed higher feed costs and an "oversupply of live hogs."
Pope predicted that Smithfield would be harmed less than other companies by the recession. "We are in the basic business of feeding average Americans," he said. "Pork is moderately priced."
Smithfield Foods, the world's largest pork producer and processor, is based in Smithfield, Va. During the conference call, Pope and Robert W. Manly IV, executive vice president and chief financial officer, repeatedly sought to reassure investors that the company had sufficient liquidity and would have no problem fulfilling pension and covenant obligations.
Among other strategies, they said, the company has trimmed capital expenditures and reduced its sow herd by 7 percent since February. "We have clearly not maintained an attitude of business as usual," Manly said.
To see more of the The Virginian-Pilot, or to subscribe to the newspaper, go to http://www.pilotonline.com. Copyright (c) 2008, The Virginian-Pilot, Norfolk, Va. Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
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