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Hog production profit slide offsets Smithfield's beef gains

Smithfield Foods, Inc. this week reported net income for the second quarter of fiscal 2007 of $44.7 million versus net income last year of $51.6 million. Sales were $2.8 billion, compared with $2.9 billion a year ago.

Results in the pork segment were down from the same quarter a year ago, principally on lower fresh meat margins. Fresh pork volume was down seven percent from last year.

Beef segment results increased substantially, reflecting higher margins in cattle raising. Operating profits of the company's cattle feeding investment swung from a loss of $2.3 million in last year's second quarter to a profit of $4.6 million in the current quarter.

Hog production operating profits declined significantly as a result of a seven percent lower number of head marketed and higher raising costs. Raising costs increased from just under $40 per hundredweight in last year’s second quarter to over $41 per hundredweight this year on higher grain costs and under-absorbed overhead due to lower volumes. Live hog prices were about the same for both years at $50 per hundredweight versus $49 last year.

The company said that the circovirus issue appears to be contained. Whereas availability of vaccines has been limited in the past, they have become more accessible in recent months. Mortality losses are sharply lower at farms where vaccines have been used.

Smithfield Foods, Inc. this week reported net income for the second quarter of fiscal 2007 of $44.7 million versus net income last year of $51.6 million. Sales were $2.8 billion, compared with $2.9 billion a year ago.

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