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Tuesday, 21 August 2012 00:00

Meat Companies Face Challenging Times

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It is the season for company results and in the last week, Cargill has reported a significant loss in earnings despite higher revenues for the year. The US-based international producer and marketer of food, agricultural, financial and industrial products and services has reported $1.17 billion in earnings from continuing operations in the 2012 fiscal year – a 56 per cent drop from a record $2.69 billion in the prior year.

Fourth-quarter earnings were $73 million, down 82 per cent from $404 million in the same period a year ago. Consolidated revenues in fiscal 2012 were $133.9 billion, up 12 per cent from $119.5 billion in the prior year.

"Cargill's earnings performance was not up to our expectations, though with notable exceptions," commented Greg Page, Cargill chairman and chief executive officer.

He identified two factors that accounted for much of the change in company results: under-par trading in markets made difficult by the economic and political environment, and the challenges of cyclical trends in global soybean processing and the North American beef industries.

From China, Zhongpin has announced that it continues to invest despite tough market conditions. The meat and food processing company has reported higher sales revenues and lower net income for the three months ended 30 June than the second quarter 2011.

Total sales revenues increased 11.4 per cent to US$408.2 million for the three months ended 30 June from $366.5 million in the second quarter 2011 primarily due to higher sales volume for pork products sold at lower average selling prices.

Net income decreased 43.0 per cent to $11.0 million in the second quarter 2012 from $19.3 million in the second quarter 2011 primarily due to a lower gross profit margin, the cost of more employees to support expansion, higher salaries, rising labour and utility costs, and higher interest expenses and income taxes.

Also in the news, Smithfield Foods is to issue its first-ever Integrated Report that provides shareholders, customers, consumers and other stakeholders with a complete review of both the company's financial and sustainability results for fiscal year 2012 in one publication.

The 2012 'Integrated Report', which combines the company's Annual Report and Corporate Social Responsibility (CSR) Report, was sent to shareholders and employees last week.

Hillshire Brands has reported a drop in income. The US-based company, the meat and food spin-off from Sara Lee, has reported a 3.3 per cent increase in adjusted net sales to $1.02 billion similar to the previous year. The company's report has been limited because of an on-going investigation into financial irregularities in a related company.

Danish-based meat processor, Tican, plans to make further investments in China to boost slaughterhouse capacity and exports.

Also in China, Thailand-based Charoen Pokphand Group is managing or setting up 13 modern farm projects focusing on the production of pigs, chickens, shrimp and eggs through its Chinese operation, Chia Tai.

In Canada, Hylife Foods expects the ramp-up of its newly upgraded and expanded Neepawa pig slaughtering plant to be completed by the end of this year.

And finally, Cal-Maine Foods, Inc. of the US has closed its acquisition of the egg production assets of Pilgrim's Pride Corporation.


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