Hit by slipping demand for pork, meat producer Smithfield Foods (NYSE:SFD) posted a deeper-than-expected 25% tumble in fiscal first-quarter earnings on Tuesday.
Smithfield said it earned $61.7 million, or 40 cents a share, last quarter, compared with a profit of $82.1 million, or 49 cents a share, a year earlier. Analysts had called for EPS of 44 cents.
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Sales were unchanged at $3.1 billion, narrowly trailing the Street’s view of $3.15 billion. Gross margins contracted to 10.7% from 12.4%.
“Our first quarter results underscore the ongoing strength of our packaged meats business, which delivered record margins and solid volume gains,” CEO C. Larry Pope said in a statement.
Smithfield, which owns the Farmland, Armour and John Morrell brands, said packaged meats volume rose 4%, while core brands volume jumped 7%.
However, Smithfield was hurt by its pork business, which suffered a 13% year-over-year decline in operating profit to $118.6 million. Fresh pork posted a loss of $12 million for the quarter, compared with a profit of $35.4 million the year before.
“We were disappointed with the poor performance of our fresh pork business, as the fresh pork complex remained under pressure due to higher supplies and weak domestic retail demand, although exports remained historically strong," said Pope.
Shares of the Smithfield, Va.-based company added 1.7% to $19.58 early Tuesday. The company’s stock has tumbled about 20% so far this year.