DOW JONES NEWSWIRES 
 

Smithfield Foods Inc. (SFD) swung to a fiscal fourth-quarter loss as tumbling prices plagued a hog production segment that was already stained with red ink.

The world's largest pork processor and hog producer said it would cut its U.S. hog herd by an additional 3%, on top of a 10% cut implemented in the past year.

Smithfield Chief Executive Larry Pope said the cuts combined with reductions by rivals would shrink supply to a point where "the industry can return to profitability," adding "this liquidation is long overdue."

Pope had warned in March that the company's fourth quarter would be difficult with continued substantial hog-production losses. But hog prices slid after the H1N1 flu scare erupted in April, as anxiety and bad publicity caused the market to plummet even though the flu can't be caught from eating pork. The company had already cut jobs, closed plants and reduced its herd amid the industrywide softening of once-booming export demand.

For the quarter ended May 3, Smithfield swung to a loss of $78.8 million, or 55 cents a share, from year-earlier profit of $2.4 million, or 2 cents a share. Sales fell 0.6% to $2.85 billion for the company - which sells products under the John Morrell, Smithfield Premium, Farmland Foods and Butterball names.

On average, analysts polled by Thomson Reuters expected a loss of 60 cents a share on revenue of $3.06 billion.

Gross margin fell to 4% from 7.2% as higher grain prices continued to pressure results.

The hog-production segment saw its loss widen to $170.8 million from $129 million while pork-processing earnings fell 20% and international profit slumped 89% amid a 25% sales drop on currency fluctuations.

Smithfield shares closed Monday at $11.18 and was down 1.6% to $11 in premarket trading Tuesday. The stock temporarily slid in late April after it was learned that one of the earliest-known H1N1 flu victims came from Veracruz, Mexico, where Smithfield has a pig herd. But in May Smithfield said no flu was detected on its Mexico farms. Tuesday, it said the virus had "no significant effect" on the quarter's results.

-By Mike Barris, Dow Jones Newswires; 201-938-5658;

mike.barris@dowjones.com