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Smithfield Foods profit leaps on higher hog prices

Hogs on a farm in Elma, Iowa, April 28, 2009
Hogs on a farm in Elma, Iowa, April 28, 2009

Smithfield Foods, the US pork giant owned by China's WH Group, said Monday its second-quarter profit more than quadrupled on higher hog prices and strong pork demand worldwide.

Smithfield Foods reported record net income of $142.9 million in the April-June quarter, up from $32.4 million a year ago.

Sales rose 14 percent to $3.8 billion.

The Smithfield, Virginia-based company is a wholly owned independent subsidiary of WH Group, formerly Shuanghui International Holdings, which acquired the world's largest pig raiser and pork processor last September in a $7.1 billion deal, the largest Chinese takeover of a US company.

Smithfield said its solid earnings in part reflected tight hog supplies due to the deadly PEDv pig virus and robust demand both in the US and internationally, which pushed hog production profit margins to record levels.

"Domestic protein demand is impressive. Although Russia has banned US pork imports, international demand from other countries remains strong," said C. Larry Pope, the president and chief executive of Smithfield, in a statement.

Restructuring to streamline fresh pork and packaged meats operations was making progress, with packaged meats profit margins solid despite extremely high raw material costs, he said.

"Our strong performance was also propelled by our continued close collaboration with WH Group and Shuanghui, our sister company in China, to achieve synergies."

Pope said that Smithfield-branded premium chilled fresh pork sold at Smithfield kiosks in mainland China had notched up strong sales and customer traffic.

"We opened three new kiosks in July, bringing our total number of kiosks to 21, and plan to continue to expand throughout China to cover the major first-tier and second-tier cities by the end of the year," he said.

The US company's packaged meats portfolio includes Smithfield bacon, Curly's BBQ, Armour packaged goods and John Morrell hot dogs.