Smithfield Foods

(SFD)

posted a huge increase in fourth-quarter earnings Wednesday, boosted by a gain from a business sale and a 33% jump in live hog market prices.

Net earnings for the period ended May 2 rose to $122.7 million, or $1.09 a share, from $5.1 million, or 5 cents a share, a year earlier. Smithfield's completion of its Schneider Corp. unit sale added $49 million, or 44 cents a share, to the quarter's results.

Excluding items, earnings from continuing operations rose to $71.1 million, or 63 cents a share, from $4.2 million, or 4 cents a share, a year earlier. On that basis, analysts were calling for earnings of 51 cents a share. The company said the latest quarter's results on a continuing operations basis included financing costs of $6.8 million for a bridge loan for interim financing of its Farmland Foods acquisition.

Sales rose to $2.5 billion from $1.8 billion a year ago. Pork sales surged to $1.72 billion from $1.04 billion a year earlier, while hog production revenue rose to $461.5 million from $304.1 million. Live hog prices averaged $46 per hundredweight, compared with under $35 per hundredweight in last year's quarter.

Smithfield said its beef segment returned to profitability in the quarter. This followed several months of unprofitable operations due to the ban on beef exports from the U.S. to most foreign countries following the discovery of a case of mad-cow disease in Washington state in December 2003.

Smithfield's shares were down recently 63 cents, or 2.1%, to $29.58.

The company also unveiled a new "bacon strategy" to expand that sector by at least 20%. Smithfield plans to improve both its raw and precooked bacon business by becoming a net buyer of pork bellies. The strategy calls for expanding its current bacon capacity by the equivalent of 15 new bacon production lines and developing 100 million pounds of new bacon volume -- more than a 20% increase in business.

Looking ahead, the Smithfield, Va.-based company is optimistic about fiscal 2005. "Live hog prices look strong for the remainder of the calendar year, and pork demand is excellent," the company said in a statement. "Beef margins for the near term are quite favorable, and our processed meats business looks very good, with several significant opportunities for new business in the near term."

Analysts' expectations for fiscal 2005 are a profit of $2.17 a share, compared with $1.50 a share earned in 2004.