UPDATE: Smithfield 1Q Results Missed Targets On Hog Woes

(Includes ratings actions from S&P and Moody's, updates stock price.)

 
    DOW JONES NEWSWIRES 
 

Smithfield Foods Inc. (SFD) announced fiscal first-quarter results were below its expectations as the meat processor sees greener pastures ahead.

The company didn't give details in a filing with the Securities and Exchange Commission beyond saying "record" results in its packaged-food business were more than offset by greater-than-expected losses in its hog-production business.

While Smithfield noted the company met its planned production and feed-cost cuts, "the company did not experience seasonal improvements in hog prices" as the recession and H1N1 flu outbreak depressed demand, particularly in the export markets.

The company also said the quarter ended Sunday was the last which will be "significantly" impacted by grain positions Smithfield entered into last year. The company locked in some prices just as commodities peaked.

Depressed hog prices and demand have been hurting Smithfield for a while, and the company has responded with plant closures and production cuts. The company's loss in the latest fiscal year was its first since the 1970s.

Smithfield also said its first-quarter results would also include write-downs because of idled production as it looked to reduce herd size and commodity exposure.

Standard & Poor's Ratings Services reacted to the warning with a one-notch downgrade of Smithfield to B-, putting it on the cusp of highly speculative territory. Credit analyst Patrick Jeffrey said the company isn't expected to meet S&P's earnings target as he highlighted the Smithfield's debt pressures.

However, Moody's Investor Service reiterated its B2 ratings, which is one step above where S&P has Smithfield on its scale.

Smithfield's shares were recently up 0.7% at $12.79 amid a broad market rally. The stock is down 49% the past year.

-By Kerry Grace Benn, Dow Jones Newswires; 212-416-2353; [e-mail]