Smithfield’s earnings fail to meet expectations
Smithfield Food expects to report fiscal 2007 fourth quarter income in the range of $.30 to $.35 cents per share, coming in under predictions from Wall Street analysts of $.44 cents per share.
The United State’s largest pig producer said in a statement that the lower than expected earnings are due to higher costs in its “hog production operations and losses in its cattle feeding business.”
Meat producers that use corn to feed their livestock have had to struggle with rising feed costs, which have been driven up by the strong demand from the ethanol industry. (Corn is used to make ethanol).
According to a report from the US Department of Agriculture (USDA), the price of corn averaged at around $2 a bushel for about 10 years but this year climbed to well above $3.
Residents of Sioux Falls are also anxious about the financial health of Smithfield as the company’s proposed $100 million expansion of its Morrell plant in Sioux Falls has now been put on hold.
Whether or not the expansion will go ahead or be cancelled has yet to be decided.
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