SMITHFIELD, Va. -- Smithfield Foods Inc. today reported net income for the first quarter of fiscal 2007 at half of last year's level -- $24.6 million vs. net income of $49 million for first quarter 2005.

Sales were $2.8 billion, compared to $2.9 billion last year.

The pork segment benefited from improved fresh pork market conditions in the last half of the quarter in spite of relatively high hog prices. Processed meats volumes were flat compared to the previous year, although the company experienced strong growth in spiral hams and other ham products, pre-cooked ribs, lunch meats and dry sausages. Fresh pork volumes were down in the quarter, by design. Results include a $6.5 million pre-tax mark-to-market gain on open commodity positions.

Operating profit in the beef segment was slightly below last year as improved results in beef processing on lower cattle costs and higher demand were more than offset by losses related to the company's cattle feeding investments. As a result of the lower cattle markets, the cattle feeding investment reported a loss of $8.4 million versus a profit of $5.6 million last year.

In the hog production segment, operating results declined on higher raising costs, lower volumes and an impairment charge in connection with the pending sale of the company's share of its Brazilian live hog production operation. Live hog prices of $51 per hundredweight remained about the same as the first quarter of last year. In the United States, however, volume was down three percent from a year ago and raising costs increased to $41.50 per hundredweight from $40 last year. The impairment charge for the Brazilian investment was $4.2 million, pre-tax, or about $.02 per share.

"We had a respectable quarter even though the markets were not particularly in our favor," said Joseph W. Luter III, chairman and CEO. "I continue to be pleased that our integrated model delivered results even as overall industry conditions were weak."

With sales of $11 billion, Smithfield Foods is the leading processor and marketer of fresh pork and processed meats in the United States, as well as the largest producer of hogs.

SOURCE: Smithfield Foods via PR Newswire.