Smithfield Foods reports 3% rise in Q3 profit

US-based pork processor Smithfield Foods has reported that its net income for the third quarter of fiscal 2013 increased by about 3% to $81.5m, compared with $79m in the corresponding quarter in the previous year, fuelled by growth in packaged meats and contributions from international operations.

The company said that its third quarter earnings were positively impacted by a lower than expected effective tax-rate, which is attributable to increasing profits from its international operations that are taxed at lower marginal rates.

Smithfield Foods’ revenue for the third quarter of fiscal 2013 increased by 3% to $3.6bn, compared with $3.4bn in the same quarter of fiscal 2012, driven by higher volumes in all segments.

Smithfield Foods president and chief executive officer C Larry Pope said that the company’s Smithfield bacon, Eckrich dinner sausage and Armour dry sausage have achieved double-digit growth.

"We were very successful in broadening distribution of our core brands in a number of key product categories including bacon, dinner sausage, deli meats, dry sausage and ham steaks," Pope said.

Fresh Pork operating margins were at 4%, or $7 per head, but declined from the previous year. However, larger industry pork supplies pushed the USDA pork cutout down 5%, while live hog prices dropped 2%.

Operating profits of packaged meats rose by 7% to $125.9m, driven by a combination of market share improvements and distribution gains attributable to greater investment in marketing and product innovation.

Its hog production segment posted an operating margin of 8%, or $15 per head, while the company’s international segment delivered operating profits of $43.7m.

Over the entire 2013, Smithfield Foods expects consistent growth from its packaged meats business, with increased market share and broader distribution of its core brands.