"Notwithstanding a bullish hog production outlook, PED (virus) concerns seem to have thwarted market expansion for now," said
Overall net income -- the total monetary amount reported after the costs of goods sold, taxes and expenses have been accounted during the reporting period -- topped
Company officials recorded growth throughout all its segments.
Hog production operating margins for the company was 15 percent, or
"Volume grew 6 percent with notable increases in bacon, hams, hot dogs and dry sausage," Pope said. "Ham volume was significantly higher, owing to the later timing of Easter."
Other notable increases include its international market growth, where margins grew 8 percent to
Pope added that continued growth in
"Synergy opportunities with
"We will continue to create value through organic growth ...while leveraging the benefits of positive market fundamentals in the U.S.," Pope said. "I am very optimistic about the earnings power of this company."
But despite seeing a surge in profit, officials warned the effects of PED virus, or porcine epidemic diarrhea virus, could impact the firm's overall market growth and future product pricing.
The virus, which was first introduced in the U.S. around
Humans cannot contract the virus by eating meat from an infected hog.
Because of the virus' impact on hog production,
"Fundamentals were very supportive, particularly in our hog production segment," Pope said. "With tight supplies due to PED (virus) and strong demand both domestically and internationally, which pushed hog production margins to record levels."
"Taking up some of the loss of piglet deaths are higher weight pigs," Warner said.
Hog production officials estimate close to 9 million pigs have perished since the virus was first introduced in the U.S., Warner said.
"On average, close to 110 million pigs go to market in the U.S.," Warner said. "Over 14 months, you're looking at 5 to 6 percent that have died as a result of the virus ... that is going to have an affect on the number of pigs slaughtered."
Year-over-year, live hog market prices surged 30 percent, or
"A lot is from demand, because you have producers not affected by virus by sending heavier pigs," Warner said. "Without that, we would see prices increase even more."
Warner said pork producers have noticed a slowdown in the spread of the virus this summer, noting that heat has been a deterrent for the spread of the disease. He added officials with the pork producers council have been working with the
But with fall's cooler temperatures arriving, pork producers are leery about next season's production.
"We're concerned about the disease and the affect it has on producers," Warner said. "But even bigger than that is the emotional toll it takes on the farmer and his workers to have to deal with thousands of dead piglets. These are family-run operations, these are small businesses, these guys love what they do, and for them to see thousands of dead piglets is pretty damaging."
Despite announcing a scale-back in pushing its products into emerging new global markets, officials said they have no plans to effect operations at its
Kirkham confirmed the group began trading publicly on
"Our management is intensely focused on implementing our organic growth plan, which is working," Pope said. "I am very pleased with the consistency solid margins in our packaged meats business again this quarter, as well as gains in volume, market share and distribution across a number of our core brands and key products."
O'Neal can be reached by phone at 757-247-4744.
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