Smithfield: The second paragraph from the end is particularly encouraging...

June 15, 2009

I hope they go belly up this year!!!! I know, I know.

Industry News - PM

Dark skies for Smithfield

By Tom Johnston on 6/15/2009

Wall Street doesn't expect a sunny forecast Tuesday when Smithfield Foods Inc. reports its fourth-quarter results. Analysts on average predict the world's largest pork producer will post a loss on continuing operations of $63.17 million, or 56 cents per diluted share, for the fourth quarter ended in April and a fiscal-year loss of $173.58 million, or $1.28 per share, according to a report by Reuters, citing Reuters Estimates. It would mark Smithfield's first yearly loss since 1975. Smithfield earned $1.8 million, or 1 cent per share, on continuing operations in fourth-quarter 2008, and $139.2 million, or $1.04 per share, in fiscal year 2008. Analysts

hope for some sort of positive feedback from Smithfield executives during an earnings call scheduled for Tuesday morning, but the company has warned that its hog production business would likely lose money for most of the current fiscal year started in May. The pork industry has been taking a beating from rising feed costs, lagging export demand related partly to the H1N1 outbreak and weak hog prices. Lowered expectations Such factors prompted Stephens Inc. analyst Farha Aslam, for example, to lower Smithfield's fiscal 2010 estimate to a loss of 32 cents per share from earnings of 21 cents per share. She forecasts sales to be down 1.1 percent to $2.8 billion due to lower sales in the pork segment, and operating profit will swing to a loss of $53 million from earnings of $27.9 million last year. Aslam predicts Smithfield will meet its debt covenants because Smithfield is expected to benefit from short hog hedges,

but the company likely will violate its interest coverage covenant in the second quarter of its current fiscal year. Shares of Smithfield were $11.40, down 52 cents, in late-morning trading Monday on the New York Stock Exchange.