Smithfield profit plunges on drop in exports

Friday, June 14th, 2013 | Finance News

(Reuters) - Hog producer Smithfield Foods Inc , the subject of a $4.7 billion bid from China's Shuanghui International, posted a 63 percent fall in net profit as exports to China and Russia fell due issues related to a drug it uses to produce lean meat.

Smithfield, whose products include Smithfield bacon and Eckrich sausages, said its net income fell to $29.7 million, or 21 cents per share, in the fourth quarter ended April 28, from $79.5 million, or 49 cents per share, a year earlier.

Revenue rose 3 percent to $3.32 billion.

"For the industry, pork exports were down to nearly every major market in the fourth quarter with volumes to China and Russia falling over ractopamine certification requirements," Chief Executive Larry Pope said in a statement on Friday.

Ractopamine has been banned in China and Russia. Smithfield said on May 14 it would soon raise half of its hogs on feed that does not contain ractopamine.

The company also said a weaker yen resulted in lower shipments to Japan.

Smithfield did not provide an update on the takeover, which analysts and politicians have said could face land ownership issues in several states as well as scrutiny from a federal government panel that assesses national security risks.

The panel is not expected to block the sale, which if completed would result in a huge increase in Smithfield's exports to China.

Smithfield said earlier this month that it would discontinue earnings conference calls because of the pending deal.

Smithfield shares were little changed in light premarket trading. They closed at $32.81 on Thursday on the New York Stock Exchange, below Shuanghui's offer price of $34 per share.

(Reporting by Aditi Shrivastava and Lisa Baertlein; Editing by Saumyadeb Chakrabarty)

Source