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Seaboard pork business posts lower 2018 income

Seaboard Corp. posted lower operating income on higher sales in its pork division in 2018, as it sold more pork products but at lower prices, the company said in its annual report.

Operating income for the pork division was $117 million, down from $193 million in 2017. Net sales climbed to $1.77 billion from $1.61 billion a year ago.

The decrease in operating income was primarily due to lower prices for pork products along with higher feed costs. Seaboard sells pork to international customers in China and Mexico, among other countries, and recent incremental tariffs continue to have a negative impact on earnings, the company said.

Boosting the division's sales were higher volumes of pork products sold, increased volumes and prices of biodiesel sales, receipt of $42 million in federal blender credits and higher sales of market hogs to third parties, the company said.

Management anticipates positive operating income for the pork segment in 2019, according to the report.

Capital investments, 2019 budget

During 2018, Seaboard invested $86 million in its pork operations, primarily for additional hog finishing barns and an expansion of the company’s Guymon, Okla., processing plant.

The pork segment’s 2019 capital expenditures budget is $217 million, which will be used for the Guymon plant expansion and construction or possible acquisition of additional biodiesel production facilities. The pork plant will continue to operate at full production during the construction.

The Guymon plant has a double-shift capacity to process about six million hogs a year and generally operates at capacity with additional weekend shifts depending on market conditions, Seaboard said.

The pork division also operates biodiesel plants in Guymon and St. Joseph, Mo. Guymon has capacity to produce 46 million gallons of biodiesel a year and St. Joseph has annual capacity for 30 million gallons. Biodiesel is made from pork fat supplied by the division’s Oklahoma pork processing plant and from other animal fat and vegetable oil purchased from third parties. The biodiesel is sold to fuel blenders for distribution.

Turkey losses

Seaboard reported a loss of $16 million in 2018 on its investment in turkey processor Butterball, compared to a loss of $4 million a year ago. The larger loss in 2018 was primarily the result of higher logistics and production costs and lower volumes of turkey products sold, Seaboard said.

Based on recent market conditions, management currently cannot predict if this segment will be profitable in 2019, the company said.

Net earnings, sales

The full company posted a net loss in 2018 of $17 million, or $14.61 a share, compared with a profit of $247 million, or $211.01 a share, the year before. Net sales for the year rose to $6.58 billion, from $5.81 billion in 2017.

For the fourth quarter, the company recorded a loss of 91 million, or $77.58 a share, compared with earnings of 23 million, or $19.38 a share, the year before. Fourth-quarter sales rose to $1.66 million from $1.59 million.

Source : Meatingplace

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