Smithfield Foods Inc. swung to a loss in its fiscal first quarter as high commodity costs hurt the nation's largest pork producer and processor. The commodities market is so volatile, its chief executive said, that the company doesn't even want to try to predict its future results.
Commodity costs leave pork producer Smithfield Foods in red
August 27, 2008 at 2:45AM
Costs for key ingredients such as corn and soybean meal were up more than 33 percent in the quarter and the cost of raising hogs soared 25 percent. The hog-production sector lost $38.8 million -- down from a profit of $93 million a year ago -- because of the higher costs.
Overall, Smithfield said Tuesday, it lost $12.6 million, or 9 cents per share, in the period, down from a profit of $54.6 million, or 41 cents per share, a year earlier. The company said the loss was caused partly by a $20.1 million write-down in the value of commodity contracts, which hurt earnings by 15 cents a share.
The commodity markets seem to be improving a bit, said C. Larry Pope, Smithfield president and chief executive. But he told investors in a conference call that the changing market is "staggering to us on a daily basis" and the company declined to predict the rest of its fiscal 2009 year because of it.
The company's businesses include Butterball LLC, a joint venture; Smithfield Beef Group, Green Bay, Wis., and Patrick Cudahy Inc., Cudahy, Wis., maker of packaged meats.
Sales at the Smithfield, Va.-based company rose 20 percent to $3.14 billion from $2.62 billion in the quarter ending July 27.
Wall Street analysts, who typically exclude one-time costs, expected a loss of 4 cents per share on $2.87 billion in sales, according to Thomson First Call.
Borders Group Inc. The bookseller said Tuesday that it narrowed its losses and slashed its debt during the second quarter, but sales continued to decrease as consumers limited discretionary spending.
The Ann Arbor, Mich.-based company said it lost $9.2 million, or 15 cents a share, for the quarter ending Aug. 2. That compares with a loss of $25.1 million, or 43 cents a share, in the same quarter of last year.
"We're very pleased," Borders Group CEO George Jones said. "We feel like we've been managing our business very well and cutting expenses."
The company, which has been restructuring and selling some business units, said it lost $11.3 million, or 19 cents a share, from its continuing operations, compared with a loss of $18.1 million, or 31 cents a share, last year.
Analysts polled by Thomson First Call had anticipated a second-quarter loss of 29 cents per share, on average.
Revenue fell to $758.5 million from $812.4 million. Borders said comparable-store sales for the quarter fell 8.9 percent, partly because of the release of a book in the Harry Potter series last year and current declines in music sales.
Excluding Harry Potter and music sales, comparable-store sales fell by 3 percent for the quarter.
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