Smithfield profit plunges after China blocks imports
Ban on additive used by Smithfield Foods hit China sales, and the strong yen hurt exports to Japan
Smithfield Foods, subject of a US$4.7 billion bid from China’s Shuanghui International, posted a 63 per cent drop in quarterly profit as costs rose and exports to China fell due to a ban on an additive it feeds to pigs to produce lean meat.
Smithfield has already started to wind down its use of the additive, ractopamine, and resumed shipments to China in March.
But it said double-digit declines in exports to China and Russia, which also banned the additive, had pushed production onto the domestic market in the fourth quarter, hitting its hog production and fresh pork businesses.
Smithfield, which does not provide a breakdown of revenue by country, also said exports to Japan fell due to a weaker yen.
The company did not provide an update on the takeover, which analysts and politicians have said could face land ownership issues in several states as well as scrutiny from a federal government panel that assesses national security risks.
The panel is not expected to block the sale, which if completed would result in a jump in Smithfield’s exports to China, the world’s biggest consumer of pork.