Smithfield Foods Inc. said Thursday its fiscal first-quarter profit more than doubled, largely because of higher pork and beef sales, income from its recently acquired businesses and a smaller loss from discontinued operations.
The Smithfield-based company's net income for the period ended July 29 increased to $54.5 million, or 41 cents per share, from $24.6 million, or 22 cents per share, in the same period last year.
Analysts polled by Thomson Financial expected earnings of 42 cents per share.
Earnings from continuing operations rose to $62 million, or 47 cents per share, compared with $39.9 million, or 36 cents per share, a year ago.
The current period's results included an $800,000 loss from discontinued operations compared with a $4.9 million loss last year.
Revenue for the quarter rose 21 percent to $3.36 billion from $2.77 billion in the previous year. That beat analysts' estimate of $3.25 billion.
Shares jumped $1.80, or 6 percent, to $31.89 in midday trading.
"Given the challenges of higher grain costs and the continued adverse fresh pork environment, I am generally satisfied with our performance in the first quarter," Smithfield chief executive C. Larry Pope said in a release.
Pork sales increased to $2.23 billion from $1.74 billion, while beef sales grew to $754.7 million from $623.7 million. Hog production revenue rose to $605.6 million from $458.4 million.
In the pork business, the volume of packaged meats grew 28 percent from the year-ago period, primarily because of Armour-Eckrich, which Smithfield Foods acquired last October. Excluding that business, total packaged meats grew by 2 percent, offsetting lower fresh pork sales.
"We do expect traditionally, as we move into cooler months, the demand for (fresh pork products) will improve significantly," Pope said in a conference call with analysts.
Hog production costs continued to rise in the quarter, but Pope expects higher selling prices and lower corn costs.
The beef business saw its margins rise, reflecting increased volume and higher exports, Smithfield said.
The international segment reported a profit, compared with a slight loss in the 2006 period, with strong performances from Groupe Smithfield - which acquired Sara Lee's European meats business last August - and the company's Polish operations. The Butterball turkey business, acquired last October, also reported solid results.
Second-quarter results will be affected by outbreaks of swine fever at two Romanian hog farms that have forced the company to write down inventory at an estimated pretax cost of $4 million to $5 million, according to Smithfield. The company Wednesday learned that an outbreak had occurred at a third Romanian farm, but costs of dealing with that outbreak have not been determined.
"This most recent setback in Romania is disappointing and will certainly impact our results in that country for some time going forward," Pope said. "However, we remain committed to our Romanian strategy."
On Friday, Smithfield announced that it had reached a deal to sell 60 million pounds of Paylean-free pork to China. There had been speculation that China would need to import a significant amount of pork to make up for disease losses within the country.
Smithfield, the nation's largest hog producer and pork processor, sells beef and turkey and makes bacon, sausage, hot dogs and luncheon meats.