SMITHFIELD, Va. (AP) -- Smithfield Foods' third-quarter net income got a huge boost from an insurance claim, the world's biggest hog producer said Thursday, and also a sustained increase in the demand for pork.
Shares soared 9 percent, or $2, to $24.75 in premarket trading with the company easily beating Wall Street expectations on both profit and revenue during what is traditionally a weak production quarter for the industry.
Smithfield reported a quarterly net income of $202.6 million, or $1.21 per share, for the three months ended Jan. 30. In the same quarter last year the company posted net income of $37.3 million, or 22 cents per share.
The results included a $120.6 million gain tied to a fire insurance recovery. Excluding one-time items, adjusted earnings were 84 cents per share. That easily topped the 69 cents per share that analysts polled by FactSet were looking for.
Quarterly revenue rose 11 percent to $3.19 billion from $2.88 billion partly on higher prices, topping Wall Street's estimate of $3.13 billion.
"Strong global demand for pork, combined with tight supplies, propelled exceptional fresh pork results in the quarter," President and CEO C. Larry Pope said.
The company also recorded better hog production and international sales. Export demand remained strong as well.
Pope said the third quarter is typically the weakest for hog production, but that the segment's results improved because of lower hog supplies, higher live hog prices and favorable grain hedges. The company expects its hog production business will be profitable in fiscal 2011 and beyond even though it is dealing with rising grain prices.
Smithfield Foods Inc. credited its improved sales to higher pork segment average unit selling prices and increased live hog market prices.
Better demand has helped to firm up prices that had declined because of the economic downturn and a consumer scare connecting pork with swine flu, which government and industry officials said was unfounded.
Among the company's strongest individual products were Armour LunchMakers, Armour Pepperoni, Curly's Barbeque, Kretschmar Deli and Smithfield Marinade.
On Wednesday the Smithfield, Va. company named two new directors to its board. Richard T. Crowder, professor of international trade at the College of Agriculture and Life Sciences at Virginia Polytechnic Institute and State University, and Margaret G. Lewis, President of HCA's Capital Division are the newest board members.
Gaoning Ning, chairman of COFCO Ltd., China's largest national agricultural trading and processing company, left Smithfield's board last week, due to "an increasing number of other conflicting business and public commitments," the company said.