Swift Posts $48.6 Million Loss as Beef Sales Decline

US - Swift & Co., the third-largest U.S. beef and pork producer, said it had a net loss of $48.6 million in the quarter ended Feb. 25 as overseas sales were limited because of mad-cow disease related restrictions.
calendar icon 10 April 2007
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A year ago, there was a net loss of $49.4 million in the fiscal third quarter, Greeley, Colorado-based Swift said today in a filing with the U.S. Securities and Exchange Commission. Sales fell 6.9 percent to $2.09 billion.

Closely held Swift has had just one-profitable quarter since November 2004, reflecting a drop in beef exports because of restrictions imposed by trading partners after the U.S. found its first case of mad-cow disease in late 2003. Beef sales in the recent quarter fell 16 percent to $1.l6 billion while revenue from the company's pork and Australian operations increased.

``Our revenues and net income may continue to be materially adversely affected in the event previously announced import restrictions continue indefinitely,'' Swift said in the filing.

Sales by Swift's Australian unit, which include four beef plants, rose 14 percent to $425.7 million as the business sold more beef to Asian countries such as Japan and South Korea, where most cuts of U.S. beef are still banned. Pork sales rose 2.9 percent to $511 million.

Tight Cattle Supplies

In the U.S., Swift's profit margins have been reduced by tight supplies of slaughter-ready cattle, as some of the highest corn prices in a decade discouraged feedlot operators from buying younger animals for fattening. Live cattle prices are up 20 percent in the past year.

The total number of cattle in feedlots as of March 1 was 11.599 million, the U.S. Department of Agriculture said last month. That's down 3.5 percent from a year earlier.

Swift was also hurt in December when the U.S. government raided six plants, arresting 1,300 workers on immigration violations. The raids cost the company $30 million in lost production and other expenses, Swift said earlier this year.

Source: Bloomberg
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