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.
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.
