The Smithfield, Virginia-based company reported a loss of $12.6 million, or 9 cents per share for the fiscal first quarter ended July 27, compared with a profit of $54.6 million, or 41 cents, a year earlier. That included $15.9 million, or 12 cents per share, in income from discontinued operations, plus $25.6 million, or 19 cents, in costs and charges. Excluding those one-time items, the loss would have been about 2 cents per share. On that basis Wall Street analysts on average expected a loss of 4 cents per share, according to Reuters Estimates.
"This quarter looked good enough, though we believe a recent downdraft in hog prices and calendar 2009 export outlook in the face of a strengthening dollar are the more salient issues," Jonathan Feeney, food analyst at Wachovia Capital Markets, wrote in a research note. (I thought a stronger dollar was a good thing? Oh wait, we said be careful for what you wish for because it will hurt all the companies goosing earnings on weak dollar exports - that's ok Wall Street will figure this out in about 6 months when the earnings reflect this - in the meantime they are too busy high fiving each other over this "great" development because it allows Uncle Ben to keep rates artifically low. Why do we like this? Because it sets up the next great money making scheme/bubble for Wall Street into 2013 or so.)At Smithfield, the hog unit lost $38.8 million, compared with a year-ago profit of $93 million, as hogs, on average, sold for $55.50 per 100 lbs, but cost $61 per 100 lbs to raise. (I like to call this the "airline business model" - you know, sell something for less than it costs - than just wait for the Wall Street computers to rush into your stock, with traders clapping all the way because now you are losing less money then you did 6 months ago - meanwhile selling off stocks who actually make money because that was last year's trade - "profitability" is sooooooo 2007) It called the remainder of 2008 for hogs "unfavorable."
For the fiscal third quarter ended July 27, Laurel, Mississippi-based Sanderson Farms, the No. 4 U.S. chicken producer, reported a loss of $3.65 million, or 18 cents per share. That included a charge of $1.7 million, or 9 cents a share, paid to settle litigation. Minus the charge, Sanderson's loss would have been $1.945 million, or 9 cents per share. On that basis, Wall Street analysts expected a loss of 5 cents, according to Reuters Estimates.At Sanderson, in addition to higher feed costs, a slowdown in restaurant and food-service businesses have affected the company as more cash-strapped consumers eat at home.
